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7 Index Funds to Buy to Retire a Millionaire

InvestorPlace - Stock Market News, Stock Advice & Trading Tips Although the market shows signs of improvement, the waters are still choppy enough for investors to focus on index funds to buy. The post 7 Index Funds to Buy to Retire a Millionaire appeared first on InvestorPlace. More From InvestorPlace Buy This $5 Stock BEFORE This Apple Project Goes Live The Best $1 Investment You Can Make Today Early Bitcoin Millionaire Reveals His Next Big Crypto Trade “On Air” It doesn’t matter if you have $500 or $5 million. Do this now......»»

Category: topSource: investorplaceNov 24th, 2022

Annuity Options For Retirement Savings – No Fuss, No Jargon, No Gimmicks

As of November 2021, only 15% of private industry workers had access to a defined benefit pension from their employer. Why is that disheartening? A pension guarantees a steady income once you retire. Meanwhile, more options are being offered to workers to save for retirement. As of 2021, 81% of private-sector employees had access to […] As of November 2021, only 15% of private industry workers had access to a defined benefit pension from their employer. Why is that disheartening? A pension guarantees a steady income once you retire. Meanwhile, more options are being offered to workers to save for retirement. As of 2021, 81% of private-sector employees had access to employer-sponsored retirement plans, such as 401(k). .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Ray Dalio Series in PDF Get the entire 10-part series on Ray Dalio in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q3 2022 hedge fund letters, conferences and more   Furthermore, studies show that employers are looking to enhance their defined contribution (DC) retirement plans in an effort to increase employee security, financial well-being, and retention. In contrast, a Morgan Stanley at Work study found that 62% of employees cut back on short- and long-term savings contributions in the face of high inflation. To make matters worse, there is a great deal of uncertainty surrounding Social Security’s future. A Social Security Board report issued in 2021 predicted that the agency’s cash reserves would be exhausted by 2034 – one year sooner than their 2020 report anticipated. Let’s be honest, though. A retirement plan only provides savings. The income they provide is not guaranteed. And that’s where annuities come into play. With annuities, you can generate a steady and guaranteed income stream in retirement by accumulating earnings tax-deferred until you are ready to withdraw. Unfortunately, many people do not fully understand the options available during payouts. The following information will help you gain a better understanding of the topic. How an Annuity Works Annuities provide people with a steady cash flow during their retirement years, so they don’t have to worry about outliving their money. When retirement savings aren’t enough to live off of, some people buy annuities from an insurance company or a financial institution. In other words, annuities are a good choice for those who want stable, guaranteed retirement income. However, for young people and those who need easy access to their money, annuities aren’t recommended because invested cash is illiquid and has withdrawal penalties. There are several phases and periods in an annuity. They are referred to as: During the accumulation phase, annuities are funded, and payments begin. During this stage, your money grows tax-deferred. Once payments start, the annuitization phase starts. There are usually two types of annuities: immediate and deferred. Before you buy an annuity, you should ask if you want regular income right away or in the future. We’ll quickly go over each’s advantages and disadvantages to help you decide. With deferred payments, your money grows over time. Annuities accumulate earnings tax-free until you start receiving payments like 401(k)s and IRAs. Keeping that amount up could lead to higher payments down the road. These are known as accumulation periods or accumulation phases in annuity terminology. The name ‘immediate annuity’ says it all. Payments can start rolling in as soon as the buyer pays the insurance company. The Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA) regulate annuities. Agents and brokers who sell annuities need a life insurance license, and a securities license if they sell variable annuities. Typically, these agents and brokers get a commission based on the contract’s notional value. Types of Annuities “Just like there is all different type of pizza, there are also a variety of different annuities,” explains Due Founder and CEO John Rampton. “But, the three main types of annuities are fixed annuities, variable annuities, and indexed annuities.” Be sure to research the different types of annuities, how they work, and the fees associated with them before selecting one. Additional flexibility may be available through riders alongside your annuity contract. As with pizza toppings, you’ll probably have to pay more for a rider. Fixed annuities “In general, a fixed annuity is easy to grasp since it’s the most straightforward,” John adds. A fixed interest rate is promised by the insurance company rather than being tied to market rates. For example, with a Due Fixed Annuity, you’ll get a 3% guaranteed interest rate on your money. There are two types of fixed annuities. The fixed immediate annuity provides a fixed income stream over a specific period of time in exchange for a lump sum payment. The payment may last for the rest of your life, depending on the contract. It is also common for payments to begin immediately. In the same way as immediate fixed-income annuities, deferred annuities are affected by time. The income stream, however, is delayed in comparison to immediate annuities. The payments can take months to years to start after you buy your annuity. Since your annuity is accumulating interest, this is what’s called the accumulation period. Your income may increase in the future if you make extra payments during this period. Variable annuities Variable annuities do not have as clear-cut rules as fixed annuities. As a matter of fact, you may even consider these to be investment products. You can select a variety of investments with a variable annuity. Your contract’s value is determined by those sub-accounts. Its value may rise or fall based on the performance of your investments. In most cases, investors invest in stocks, bonds, and money markets through mutual funds. There is also the possibility of combining these investments. Indexed annuities It is kind of like a hybrid between a fixed annuity and a variable annuity. Market drops are protected by index annuities, but rising markets are not. How come? With an indexed annuity, you can receive guaranteed income. An index, such as the S&P 500, will determine another portion of your income, providing you with the opportunity to grow your investment. Annuity Payout Options Another thing to consider is how long the income stream will last. You can structure the payout schedule however you want. However, these are the most common payout options. Single Life/Life Only The single-life annuity, also called a straight-life annuity or life-only annuity, lets you get payments for life. With this annuity, there are no survivor benefits, as opposed to some other options that let you name beneficiaries or spouses. In case you die before receiving your entire premium, the insurance company keeps the rest. By buying a period-certain annuity, you can reduce the chances of this happening. In short, no matter how long you live, you will always receive a monthly payout. There is a downside, however. If you pass away relatively quickly, your beneficiaries will not be able to inherit anything. Life Annuity with Period Certain (Fixed Period/Guaranteed Term) Annuities with a certain period are similar to straight-life annuities. Even if the annuitant dies, the payments will keep coming for a minimum period of time. The annuity payments will go to a beneficiary or the annuitant’s estate if the annuitant dies before the end of the period. Your monthly payments will be lower when you add the period certain. Joint and Survivor Annuity A joint and survivor annuity makes payments to both the annuitant and another person, usually a spouse, for the rest of their lives. When you choose a straight-life or period-certain annuity, you get less per payment. You can also name a beneficiary and include a certain period. In the event that both annuitants die before the end of the period, the beneficiary would get the death benefit. A surviving spouse might get the full amount or a smaller percentage, depending on the contract. In most cases, it’ll be 50% or 75% of what you originally paid. Lump-Sum Payment With this option, the annuitant gets the whole annuity value at once. As a result, the IRS will require a tax payment in the year the money is distributed, which can increase the tax burden. Although this gives you more flexibility, it increases your chance of running out of money before you die. Systematic Annuity Withdrawal With a systematic annuity withdrawal, you can choose the dollar amount and number of payments without worrying about the duration. Fixed amounts are withdrawn on a regular basis. The downside? There’s no guarantee your income will last forever. It depends on how much your contract is worth. Early Withdrawal In addition to taxes owed on the money, you’ll have to pay a penalty of 10% if you withdraw money from your annuity before age 59 ½. If you withdraw within five to seven years of buying the annuity, you’ll also owe the provider a surrender charge of up to 20 percent. In the beginning, they’re high, but they’ll usually go down every year. There are some annuities that let you withdraw up to 10% of the value of the annuity without paying any fees. Monthly Payment Calculation Your monthly payment amount is based on several factors, but two of the biggest are your gender and age. Because women live longer than men, they won’t get as much money as men. As you get older, your life expectancy goes down. So, for example, a 75-year-old man with a life option gets a higher payout than a 65-year-old. Your payout option affects how long the payments will last, and that affects how much you’ll get every month. For instance, you’ll get less money if you pick the joint-life option because the payout goes to your spouse after you die. Last but not least, your payout depends on your insurance company and its expected investment returns. The company will pay you more if it can make 5% of your money instead of 3%. However, you’ll get more money if your annuity has a fixed payout or a variable payout when returns are higher. Fixed payouts don’t change, and all investment risk is assumed by the insurance company. You’re taking the market risk when you choose a variable payout because the size of the monthly payout fluctuations based on market conditions. Annuity Payout Tax Your fixed annuity payment is considered taxable income if you use an exclusion ratio after your contract has been annuitized. You should ask for your exclusion ratio once you choose your payout method, so you’ll know how much is tax-exempt. An exclusion ratio of 80% on a $1,000 monthly payout means $800 is tax-free, and $200 is taxable. There is a 10% penalty for premature distributions (those occurring before you reach age 5912), and for annuities purchased before Aug. 14, 1982, withdrawals are made using the FIFO method (first-in, first-out). If you bought your annuity after Aug. 13, 1982, the withdrawal rule is LIFO (last-in, first-out), so earnings come out first. Not only do you have to pay a 10% penalty on the withdrawal, but you also have to pay income tax on any investment gains. Avoid taking money out before age 59 ½, if at all possible. Choosing Your Annuity Payout There are a lot of things to consider when choosing an annuitization payout. As you decide which payout option is right for you, here are some things to keep in mind. What is the amount? Decide how much you’ll need every month for living or supplementing your retirement. The length of time. Estimate how long you need to keep receiving payments. Payout options that guarantee payments until your death might be a good option if you use payments for a lot of your income. Insights into legacy. During the accumulation phase, many annuities offer a death benefit that is enhanced for an additional fee. How Can You Use Retirement Annuity Income? There are a lot of ways people use retirement annuity income. Depending on your retirement goals, needs, and lifestyle, you’ll want to use it differently. Cover your retirement goals. You can use your retirement annuity income for hobbies, travel, and other things you want to do in retirement Take care of fixed expenses. As long as you combine annuity income with Social Security, you can use your annuity income to cover fixed expenses such as rent, mortgage, and utilities. Cut down on your splurging. Avoid overspending by building a retirement budget around income streams like annuities and Social Security. The most important benefit of retirement annuity income is that it can be used to protect your retirement savings in the event of unexpected expenses. Where Does an Annuity Fit Into Your Retirement Plan? An annuity can be an important part of your retirement plan. To create a well-rounded retirement plan, you can combine it with IRAs, 401(k)s, life insurance, etc. When you retire, an annuity can replace your paycheck. As long as you live, you’ll keep getting the payout. Basically, retirement annuities are life insurance policies for retirees. In case of premature death, life insurance protects your family. Your retirement savings are insured against outliving your annuity income. Your retirement portfolio can be diversified with an annuity, giving you more flexibility. FAQS Who buys annuities? Individuals looking for a steady, guaranteed retirement income should consider annuities. It’s not recommended for younger people or those with liquidity needs to use the annuity because the lump sum is illiquid and subject to withdrawal penalties. Holders of annuities can’t outlive their income stream, so they’re protected from longevity risk. How much does an annuity cost? You don’t have to pay taxes on anything you gain until you start withdrawing from an annuity. The investments you make in annuities, however, are made after tax. In other words, you cannot deduct your contributions to an annuity from your taxable income. In contrast to IRAs and 401(k)s, which allow tax-deferred growth, there are no contribution limits for annuities. An annuity allows you to save more money than other types of retirement plans. If you invest in an annuity through a qualified plan, such as an IRA, there are still limits. The downside is that withdrawals from an annuity are taxed at ordinary income rates, not capital gains rates. You will also have to pay a 10% tax penalty if you withdraw money before you are 59 ½. Those who purchase annuities within their IRAs and 401(k)s will not receive any additional tax benefits. What is a non-qualified annuity? The purchase of an annuity can be done with either pre-tax dollars or after-tax dollars. An after-tax annuity is one that was bought with after-tax money. Qualified annuities are ones you bought before taxes. Plan types that are qualified are 401(k)s and 403(b)s. When you withdraw money from a non-qualified annuity, only the earnings are taxed, not the contributions. What is an annuity fund? Annuity funds are investment portfolios where annuity holders invest their funds. Returns earned by annuity funds determine the payouts annuity holders receive. Premiums are paid by individuals when they purchase annuities from insurance companies. The insurance company invests the premiums into an annuity fund, which consists of stocks, bonds, and other securities. Is an annuity right for you? “To be honest, anyone can purchase an annuity,” notes Due founder and CEO John Rampton. “But that doesn’t mean that it’s always going to be the right fit for your retirement plans. It’s kind of like insisting that you still squeeze into a pair of skinny jeans.” “Annuities are ideal if you’re you’re healthy and expect to live a long and meaningful life,” he adds. “If so, then annuities ensure that you will not outlive your savings.” What if you’re sick? An annuity is probably not something you should buy. When you have a medical condition, your life expectancy may be reduced, or your savings may be outlived due to high medical costs. Age can also be a determining factor. If you invest in stocks or riskier options when you are younger, you have more time to recover potential losses. If you’re nearing retirement, however, annuities may provide some much-needed safety and predictability. In addition, you should take into account your other retirement options. “If you’ve maxed out other tax-advantaged retirement plans like a 401(k) or IRA, and you have the extra money to spare, then an annuity’s tax-free growth can make a lot of sense,” John states. “If you’re still on the fence, then there’s some good news for you,” he continues. “Almost all annuity contracts offer a free lock period. In most cases, they allow you, the purchaser, between 10 and 30 days to consider the terms of the contract.” You can back out if you don’t like it. Article by John Rampton, Due About the Author John Rampton is an entrepreneur and connector. When he was 23 years old, while attending the University of Utah, he was hurt in a construction accident. His leg was snapped in half. He was told by 13 doctors he would never walk again. Over the next 12 months, he had several surgeries, stem cell injections and learned how to walk again. During this time, he studied and mastered how to make money work for you, not against you. He has since taught thousands through books, courses and written over 5000 articles online about finance, entrepreneurship and productivity. He has been recognized as the Top Online Influencers in the World by Entrepreneur Magazine and Finance Expert by Time. He is the Founder and CEO of Due......»»

Category: blogSource: valuewalkNov 14th, 2022

9 Ways Millennials Can Prep For Retirement

Is it a surprise that we Millennials are scared of retirement? Not only did we survive the Great Recession and a once-in-a-lifetime pandemic, but we’re also buried under debt. Moreover, unlike previous generations, traditional pathways to wealth, such as homeownership, are increasingly out of reach. On top of that, we don’t have access to pensions […] Is it a surprise that we Millennials are scared of retirement? Not only did we survive the Great Recession and a once-in-a-lifetime pandemic, but we’re also buried under debt. Moreover, unlike previous generations, traditional pathways to wealth, such as homeownership, are increasingly out of reach. On top of that, we don’t have access to pensions or quality retirement plans from employers. And there’s a chance that Social Security won’t be there. Despite all of these challenges, we still want to retire by 50. Is that actually possible, though? It could be if you start prepping for retirement using these nine strategies. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q3 2022 hedge fund letters, conferences and more   Find A Qualified Financial Advisor Finding a qualified financial advisor doesn't have to be hard. SmartAsset's free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you're ready to be matched with local advisors that can help you achieve your financial goals, get started now. 1. Set a goal for saving for retirement. Saving for retirement can be simplified by following two simple rules. The first is to invest 10 to 15 percent of your income toward your retirement. Secondly, you should save enough to cover around 80 percent of your pre-retirement income. However, without a personal retirement savings goal, it isn’t easy to know if you’re on the right path to funding your ideal retirement. Think about your future when it comes to saving for retirement. For example, the average American life expectancy is about 79 years, according to the CDC’s National Center for Health Statistics. Therefore, if you plan to retire at 65, you should plan for your money to last for at least 15 years. In some cases, it takes even much longer, depending on your lifestyle, health, family history, and if you’re going to retire early. It’s always a good idea to estimate your annual living expenses. At the minimum, this should include taxes, housing, food, and health care. It is estimated that the average amount spent annually by “older households” (those headed by someone 65 or older) is $48,885. There are, of course, other factors to consider, such as where you live. For example, if you have a mortgage now, will you be able to pay it off by 65? Don’t forget to budget for extra costs, like travel, gifts, hobbies, and entertainment. Then, if you add up your annual expenses, you can plug that number into an online retirement calculator to see how much you’ll need to save each month. 2. Pick a retirement account that suits your needs. Millennials will not reach retirement age until well after 2034, when Social Security’s cash reserves are depleted. The chances of this happening are small, but it’s better to be prepared for the worst. In this case, they are saving for retirement without relying on Social Security. In the retirement account world, you have a lot of options. So, let’s explore some of the most popular options available. And remember that you can often invest for your future using more than one. 401(k) There’s a good chance your employer sponsors a 401(k) plan at work. If so, jump all over that. First, employees can contribute to a 401(k) directly from their paychecks before taxes. Then, until you begin taking distributions in retirement, the money grows tax-free. Unfortunately, the IRS’s contributions to 401(k)s are limited each year. ‌A 401(k) plan in 2022 will allow employees to contribute a maximum of $20,500. ‌In 2022, the catch-up contribution will increase by $6,000 for individuals over 50. The funds are intended for retirement, so you’ll be charged a 10-percent penalty if you withdraw them before 5912. The withdrawals will also be subject to regular income taxes. What is the best part of a 401(k)? There is something called an “employer match,” in which employers will also contribute to employee retirement accounts. For example, if you contribute 6% of your salary, your employer may match 50%. So if you contribute 6 percent, you will have 9 percent invested for retirement if you contribute 6 percent. It’s pretty much free money. 403(b) As of 2022, this employer-sponsored retirement plan allows contributions of up to $20,500 — and $22,500, most likely in 2023. For those over 50, the 401(k) employee contribution limit should be $30,000 in 2023. There is sometimes a match offered by the employer as well. You’ll also pay a 10-percent penalty if you withdraw your money before 59 ½, which is taxed at your ordinary income rate. Compared to a 401(k), this plan is for nonprofits and government employees. Traditional IRA Anyone with an income, including a spouse with an income, can open an Individual Retirement Account (IRA). Generally, contributions are made after taxes are deducted. But if you have an employer retirement account, you may be able to deduct contributions now, possibly reducing your tax bill. In 2023, after two years of remaining at $6,000, the IRA contribution limit and catch-up contributions will rise to $6,500 ($7,500 if 50+). After that, however, your retirement savings grow tax-free, and your income taxes are only due when you withdraw them. You have to pay a 10-percent penalty plus ordinary income taxes on withdrawals made before age 59 ½ — just as you would with 401(k) or 403(b) accounts. Some exceptions apply, such as payments for qualified college expenses or home purchases. Roth IRA As with a traditional IRA, you contribute after-tax cash, but you can withdraw the funds tax-free as they grow. Your contributions today cannot be deducted in any way. Because the gifts have already been taxed, you can withdraw them at any time without paying additional taxes. You will, however, be subject to ordinary income tax and a ten percent penalty if you withdraw your investment earnings before the age of 59 ½. To contribute to a Roth IRA as a single individual, your Modified Adjusted Gross Income (MAGI) must be below $140,000 for the tax year 2021 and under $144,000 for the tax year 2022. For couples filing jointly, the MAGI must be under $208,000 in 2021 and 214,000 in 2022. Combined contributions to all your IRAs are limited to: $6,000 if you’re under the age of 50 $7,000 if you’re age 50 or older By checking this IRS table, you can find out if you are eligible to contribute to a Roth IRA. SEP IRA or Solo 401(k) Self-employed people or small business owners can also benefit from a Simplified Employee Pension (SEP). As of 2023, SEP-IRA contributions will be limited to $66,000 per year, up from $61,000 in 2022. Employees deemed eligible to participate in your plan must also have SEP IRAs set up for them. Also, as you’re well aware by now, If you withdraw money before you turn 59 ½, you’ll pay regular income taxes and a 10-percent penalty. Business owners with no employees, such as freelancers and solopreneurs, can participate in a solo 401(k). In addition, it offers the same high contribution limit as SEP IRAs. Finally, depending on your tax situation, you may be able to choose between a traditional version (pre-tax contributions that are taxed on withdrawal) or a Roth version (post-tax contributions that can be withdrawn tax-free). The Roth solo 401(k) contribution can be withdrawn at any time without penalty, just like a Roth IRA. However, you will have to pay penalties and taxes if you withdraw investment earnings before you turn 59 ½. Brokerage account Brokerage accounts enable you to buy and sell stocks, bonds, and mutual funds through a brokerage firm. Due to their non-retirement-specific nature, these accounts do not offer any inherent tax advantages. Therefore, you are responsible for closely managing your tax liability. However, you can withdraw money when you want, and there are no contribution limits. There is no penalty associated with accessing the money before retirement. However, keep in mind that potential returns from the stock market may be lost to you. 3. Bring home the (extra) bacon. It might not be top of your mind. But you could definitely use some extra dough to pay off your student loans or afford early retirement. In my opinion, the fastest and easiest way to make extra money is through your current job. Examples include volunteering for overtime, asking for a raise, or utilizing your company’s referral program. After that, you could find ways to reduce your spending, such as canceling subscriptions you never use. Another idea would be opening a new bank account. Some financial institutions may give you a couple of hundred bucks for being a new customer. You could freelance, side hustle, or rent/sell items you already own. But, seriously. The sky’s the limit when it comes to picking up additional income. 4. Diversify everything you can. Saving for retirement does not have to be one-size-fits-all. For example, it’s possible to have both a work-sponsored 401(k) and an IRA. If you take this route, you’ll have a high-yield savings account and a taxable investment account. In addition, your future self will be better protected if you have more accounts. One of the best ways to protect your investments is to spread your money across multiple accounts and securities. In other words, don’t commit all your cash to one stock or asset. Instead, choose portfolios that diversify your money across various types of assets, such as stocks, bonds, and real estate, instead of high-cost index funds. 5. Be careful not to become a lifestyle creep. “Lifestyle creep — when an individual’s increased income leads to increased discretionary spending — is a real thing, especially for millennials,” said Steve Sexton, CEO of Sexton Advisory Group. “Higher rents, mortgages, living expenses, and lifestyle preferences can ultimately impact your larger financial goals, like saving for retirement.” You will need to stick to a budget if you want to stay on track with your retirement savings goals. And ideally, you should make every effort to live below your income. FYI, this doesn’t mean you have to go dumpster diving. In simple terms, living beneath your income means spending less each month than you earn. When you do, you’ll avoid debt and be able to contribute more to your retirement savings. “Hold yourself accountable by checking on your finances quarterly to ensure you’re on track,” Sexton said. 6. Snag the best deals. “By growing up in the .com era and the explosion of the internet, millennials know how to get deals and save on common products,” writes Matt Rowe in a previous Due article. Our first stop when shopping is often a clearance rack or tab on a website. Whenever we buy online, we do quick searches on Google to see if there are any discounts. The result is a ten percent or twenty-five percent savings here and there. As a result, we can save a lot of money over time. The honey app, for example, takes a few seconds to check and saves us money. “We also look for holiday deals or sign up for customer loyalty programs to get more discounts or free items,” he adds. Some will even go to thrift shops or second-hand stores for clothing and other fun items. “Regardless, millennials love to save, and millennials are savers because we know how to get deals on wants.” Although getting deals on wants is excellent, let’s consider saving on necessities. If possible, we utilize student discounts or online coupons at grocery stores. In addition, we purchase in bulk at places like Costco to save money. “We make lists of everything we need to avoid impulse buying unnecessary wants,” states Matt. Regarding renting and utilities, we look for ways to save, such as turning off the lights when we’re out or conserving water. Our fuel savings come from taking public transportation or walking and looking for free parking. “These are small habits, yet they are still fast-acting and long-lasting,” Matt says. “Millennials are savers because we know how to get deals and how to save along the way.” 7. Spend less on housing. Your house is probably the most significant expense and, therefore, the most effective savings opportunity. According to the Bureau of Labor Statistics, the average American’s housing budget consumes a third of their income. When it comes to buying a new home, what should you consider? When you have a large enough home, you should keep it. If not, then do not buy the biggest house you can afford. You can find out what you can afford using online calculators from Bankrate, NerdWallet, and Mortgage Loan. Using these tools, you can determine your mortgage affordability based on your income and other financial information. However, it is essential to remember that you do not need to borrow the maximum amount. If you want to maximize your savings, keep your housing expenses to 30% of your income or lower. To help you with your home-buying process, here are a few additional tips: First, work with a real estate agent. Despite signs of a cooling housing market, now is not the time to purchase without assistance. For first-time homebuyers, it’s essential to have someone who understands your concerns, needs, and problems. To get the best mortgage deal, shop around with several mortgage lenders. Loan terms and conditions aren’t just about interest rates but also about all-in costs. Stick to your budget. Again, a house beyond your means should not be a priority. Keep that budget going once you move, too. In a separate survey by Bankrate, millennial homebuyers expressed regret regarding unexpected maintenance fees. If some issues arise, you’ll want to be prepared. 8. Don’t be too aggressive with your portfolio. Imagine retiring at the age of 50. When you are in your late 40s, you should be more conservative with your portfolio than your peers who plan to work until retirement. ‌When your finances are particularly fragile, you want to avoid a series of bad markets when you’re at risk. This is called the “sequence of return risk.” Dr. Wade Pfau, professor of retirement income at the American College of Financial Services, believes this is why the first few years after retirement can be so rough. “I’ve estimated that if somebody is planning for a 30-year retirement, the market returns they experience in the first ten years can explain 80% of the retirement outcome,” he told Barron’s. “If you get a market downturn early on, and markets recover, later on, that doesn’t help all that much when you’re spending from that portfolio because you have less remaining to benefit from the subsequent market recovery.” How can this be solved? “There are four ways to manage the sequence-of-return risk,” Dr. Pfau adds. “One, spend conservatively. Two, spend flexibly.” If you don’t sell too many shares during a market downturn, you’ll be able to manage sequence-of-return risk. “A third option is to be strategic about volatility in your portfolio, even using the idea of a rising equity glide path,” he states. “The fourth option is using buffer assets like cash, a reverse mortgage, or whole life policy with cash value.” 9. Adjust your retirement plan as needed. Make sure you are on track to retire comfortably by setting and revising your retirement goals. Despite not having just graduated college like some folks, you still have time to plan your retirement. Consider how much money you will need to retire and how it will last you for the rest of your life. The correct retirement number can be found with the help of a retirement calculator. From there, take advantage of your resources now to figure out how to reach your goals. Let’s say that your current employer offers a match. Can you increase your contributions now, or should you search for a new job that offers one? Do you plan to downsize to save on expenses, or can you pay off your home before you retire? It’s okay if your plans change as you age since your life won’t look the same at 70. Keep in mind that it’s okay if things don’t go exactly as you planned. Make sure you have a backup (or two). You will thank yourself when you retire. FAQs What are the steps to retiring? Leaving the workplace may be as easy as completing HR paperwork. Replacing a paycheck, however, is more challenging. If you want to know how to go from a steady income at the workplace to a retirement income from savings, you should speak to a finance professional. You can also ask them for help determining how much to withdraw from retirement accounts and when to do so. When can I retire? In a nutshell, you’re free to retire whenever you like. There are, however, many limits to when people can leave the workforce in reality. A pension may only be available to some employees after working for the company for 20 or 30 years. To collect Social Security benefits, you must be at least 62 years old. Those receiving health insurance through an employer may wait until they turn 65 to retire since Medicare doesn’t begin until then. What is a reasonable monthly retirement income? The definition of a good retirement income will vary from person to person. To have a good retirement income, there are several factors to consider. Included in this are, at minimum, a planned retirement lifestyle, dependents, such as children or grandchildren, outstanding debts, and physical health. Most people consider 70% to 80% of their last income before retirement a good retirement income. Is there an ideal age for becoming debt-free? Individuals are often advised to be debt-free by 45 years of age. What makes this age so important? Your debts should be limited to good debt, such as a mortgage, by 45. At this point in your career, you should start saving for retirement because retirement is where you need to be. Should I retire early? You are the only one who can answer that question. However, financial advisors can run through scenarios to assist a worker in determining the right time to retire financially. By considering these scenarios, you can figure out whether retiring early might result in a shortfall of money in the future. Article by Deanna Ritchie, Due About the Author Deanna Ritchie is a financial editor at Due. She has a degree in English Literature. She has written 1000+ articles on getting out of debt and mastering your finances. She has edited over 40,000 articles in her life. She has a passion for helping writers inspire others through their words. Deanna has also been an editor at Entrepreneur Magazine and ReadWrite......»»

Category: blogSource: valuewalkOct 25th, 2022

Futures Jump, Squeezed By Reversal In UK Fiscal Plans And Apocalyptic Trader Sentiment

Futures Jump, Squeezed By Reversal In UK Fiscal Plans And Apocalyptic Trader Sentiment As we discussed and previewed over the weekend in "Behind Friday's Market Massacre: A Huge Burst Of Hedge Funds Shorting, Setting Up Another Squeeze", futures are indeed sharply higher to start the week as Treasury yields slumped and the dollar eased as the British peso (also called Britcoin) rallied and UK bonds surged as the new Chancellor Jeremy Hunt scrapped plans to cut taxes and signaled consumers would shoulder more of the increase in energy prices from next April as he set out a package of measures to get a grip on the public finances, effectively reversing pretty much all UK tax cut measures announced just a few weeks ago. Sentiment was also boosted by company results after Bank of America reported beats on the top and bottom line, rising in premarket trading while utilities and auto stocks led gains in Europe. That was indeed enough to spark a modest (for now) squeeze and as of 730am, S&P 500 futures trade higher by 1.3% and Nasdasq 100 futs rose 1.5% bouncing back from a selloff on Friday that left the technology-heavy gauge at its lowest since July 2020; Europe's Estoxx50 rose 0.7% in early London session, which sees cable higher by 1%. The BBG Dollar index was down 0.2% and the 10Y traded at 3.95%. And if all those record retail puts purchased in recent days get monetized, expect another epic meltup today. I don't think people really appreciate what's happening in the options market right now. Last week, retail traders bought $19.9 billion worth of puts to open. They bought only $6.5 billion in calls to open. This is the first time in history that puts were 3x calls. pic.twitter.com/GR2apNfFtb — Jason Goepfert (@jasongoepfert) October 16, 2022 Among notable premarket movers, Splunk rose after a Wall Street Journal report about activist investor Starboard Value building a stake of just under 5% in the application software company. Opendoor Technologies Inc. slipped after Goldman Sachs downgraded the stock to sell. US-listed Chinese stocks gained as President Xi Jinping reiterated that economic development is the party’s top priority in his speech at the Communist Party Congress, although he signaled little change in the Covid Zero strategy and housing market policies. Alibaba (BABA US) +1.9%, Pinduoduo (PDD US) +2.8%, JD.com (JD US) +3.3%, Nio (NIO US) +2.7%, Li Auto (LI US) +2%. Here are some other notable premarket movers: Opendoor Technologies (OPEN US) slides 1.8% in premarket trading after Goldman Sachs downgrades stock to sell, saying it sees the ongoing weakness in housing through next year to “depress” the online real estate platform’s earnings power and in turn limit upside in shares. Keep an eye on Fox Corp. (FOXA US) and News Corp. (NWSA US) shares after the companies said on Friday they were exploring options to recombine, while analysts suggested a deal is unlikely to solve the valuation problem for the pair. Watch PPG Industries (PPG US) shares as KeyBanc Capital Markets initiated coverage of the stock with an overweight recommendation, saying there’s probably going to be a sharp decline in costs in 1H23 that will help offset cyclical volume pressure. Keep an eye on household products stocks as Morgan Stanley is starting to warm to the sector with margins seen rebounding in 2023, while toning down its preference for beverage stocks. The broker upgrades Church & Dwight (CHD US) and Clorox (CLX US) to equal-weight from underweight, while cutting Edgewell Personal Care (EPC US) to underweight from equal-weight. Investors are focused on results due this week -- including from Bank of America which just reported stronger than expected revenues and EPS, Goldman Sachs and Tesla -- for clues about how company earnings are holding up. They’re also monitoring the possibility of more aggressive rate hikes in the US after Federal Reserve Bank of St. Louis President James Bullard on Friday left open the possibility that the central bank would raise interest rates by 75 basis points at each of its next two meetings. “I think the likelihood of them doing 75bps and more is definitely higher after the University of Michigan survey last week, reason being is that they’re late to the party of inflation control and the world economy is paying the price,” said Sunaina Sinha Haldea, global head of private capital advisory at Raymond James. “The risk is that they break growth, but what is much more concerning is that they’re risking financial stability in parts of the market, which is a risk that needs to be priced in,” she said on Bloomberg TV. In major corporate reorganization  news, the WSJ reported that Goldman Sachs plans to recombine the bank’s asset management and private wealth businesses into one unit in yet another overhaul. Morgan Stanley's in-house permabear, Michael Wilson, echoed precisely what we said on Saturday, namely that technicals may now take the upper hand over fundamentals, with the 200-week moving average acting as a strong support to equities, while inflation expectations peak. They see a tactical rally looking likely until earnings estimates are cut or a full-blown recession arrives. Meanwhile, the outlook for consumer prices in the US continues to fuel bets that the Federal Reserve may make jumbo rate hikes at its next two meetings, weighing broadly on the outlook for global economic growth and markets. Fed officials in their latest comments suggested they were ready to hike rates higher than previously planned. Kansas City Fed President Esther George said the terminal rate may need to be higher to cool prices. San Francisco Fed’s Mary Daly said she’s “very supportive” of raising to restrictive levels and to between 4.5% and 5% “is the most likely outcome.” In European stocks, utilities, autos and insurance are the strongest performing sectors. Euro Stoxx 50 rises 0.3%. IBEX outperforms peers, adding 1.1%. Here are the most notable European movers: ITV shares jump as much as 9.7%, the most since March, after the Financial Times reported that the company is exploring options for its production arm ITV Studios, including a stake sale. Nel shares rise as much as 10%, the most since late July, after the company won a NOK600m contract to provide alkaline electrolyser equipment to Woodside Energy. Made.com shares soared as much as 35% after the online furniture seller said it has received several “non-binding indicative proposals,” including possible offers for the company. Sulzer shares climb as much as 4.4% after the Swiss company announced Suzanne Thoma will replace CEO Frédéric Lalanne, who is stepping down at the end of the month. Thoma’s experience and continuation of the company’s strategic review is viewed as a positive, according to analysts. Hargreaves Lansdown shares fall as much as 7.9% after its 1Q trading update, with its CEO announcing his intention to retire amid a lawsuit relating to a failed equity fund run by Neil Woodford. Asos shares drop as much as 13% after the online fast fashion retailer said it was in talks with banks to boost its financial flexibility, following a Sky News report that the firm’s lenders were hiring restructuring advisers, including AlixPartners. Draegerwerk shares tumble as much as 7.5% after company withdrew FY22 guidance following market close on Friday, based on its preliminary 9-month figures. Shares in bike helmet maker Mips plunge as much as 27%, the most in three years, as Handelsbanken said lower-than-expected 3Q sales from the company show the bike boom of the past years turning “into a bust” while 2023 risks becoming a “lost year.” European luxury stocks drop after Chinese President Xi Jinping signaled no change in China’s strict Covid rules at the country’s Communist Party congress in Beijing on Sunday. LVMH shares decline as much as 1.8%. As noted above, the yield on 10-year gilts fell 36 basis points to 3.97% and the pound traded 1.1% higher at $1.1293 after new Chancellor Jeremy Hunt scrapped plans to cut taxes and signaled consumers would shoulder more of the increase in energy prices as he set out a package of measures to get a grip on public finances in a televised statement on Monday. It’s the start of what may be a particularly torrid week for British assets, with the beleaguered Truss battling to rescue her premiership after the Bank of England ended its emergency bond-buying program on Friday and as mutinous backbenchers plot to oust her. “I think we’re in for a period where UK credibility is continually questioned and UK assets remain incredibly volatile for a significant period of time,” Benjamin Jones, Invesco Director of Macro Research, said on Bloomberg Television. “Watching the gilt market will be absolutely key in understanding if the market does believe Hunt to be more stable and if he will be able to push these policies through.” Hunt will also speak to the House of Commons at 3:30 p.m. London time and Truss is due to host a reception for the Cabinet at 10 Downing Street on Monday evening. U-turns on the government’s “mini budget” now total £32 billion, however that may not be enough as the official estimate of the black hole in the public finances is believed around £70 billion. Earlier in the session, Asian equities resumed their decline, led by tech stocks, as investors analyzed Chinese President Xi Jinping’s speech at Party Congress, in which he ruled out changes to strict Covid rules.  The MSCI Asia Pacific Index retreated as much as 1.4% before paring the drop, with TSMC and Keyence among the biggest drags after a broader US tech selloff last week. All sectors but real estate were in the red.  Taiwan’s benchmark was a notable regional loser, ending 1.2% lower as the local currency weakened following comments by Xi’s about the island. Stock gauges in Japan fell about 1% after the Bank of Japan vowed to continue with monetary easing as the yen approached a key level.  Benchmarks in Hong Kong erased losses, while gains in defense and tech stocks helped gauges in mainland China close moderately higher after Xi’s Sunday speech emphasized national security and self-reliance in core technologies. Planned steps by Chinese regulators to stem a slump in equities also buoyed sentiment. Asian stocks have underperformed US and European peers this year as the region struggles with challenges in China in addition to aggressive rate hikes by the Federal Reserve, prompting an exodus of foreign funds from emerging countries.  "The work report made no reference to future policy changes on Covid containment,” Nomura economists including Ting Lu wrote in a note, adding that they expect Chinese markets to suffer regardless due to disappointment about either no real opening or a surge in Covid infection numbers.  Concerns of aggressive tightening by the Fed were reinforced after a survey Friday showed US year-ahead inflation expectations rose in early October for the first time in seven months. “More bad news is baked into Asia, which might suggest that the risk reward is a little bit better if we can see overall the Fed starts to stabilize at some point, perhaps early next year,” Timothy Moe, chief Asia equity strategist at Goldman Sachs, said in an interview with Bloomberg TV, citing Asia’s “excessive discounting particularly in valuations.” Japanese stocks dropped, with electronics makers the biggest drag, following US peers lower after a report showed American year-ahead inflation expectations rose for the first time in seven months.  The Topix fell 1% to close at 1,879.56, while the Nikkei declined 1.2% to 26,775.79. Keyence Corp. contributed the most to the Topix Index decline, decreasing 2.9%. Out of 2,167 stocks in the index, 476 rose and 1,603 fell, while 88 were unchanged Australia stocks slid, the S&P/ASX 200 index falling 1.4% to close at 6,664.40, tracking a decline in US shares last week after inflation expectations rose. All sub-gauges slid, with energy and materials companies the worst performers.  In New Zealand, the S&P/NZX 50 index fell 0.8% to 10,785.92. In FX, the dollar weakened against all of its G-10 peers apart from the yen, as the Bloomberg dollar spot index fell 0.2%. SEK and JPY are the weakest performers in G-10 FX, GBP and AUD outperform; the pound topped the leaderboard and UK government bonds surged on the fiscal policy u-turn. Yields on 10-year gilts fell 26 basis points to 4.05%, while sterling advanced up to 1.2% higher on the day to touch $1.1305 after the BOE confirmed it terminated its emergency bond-buying program. Hedging the pound overnight remains a costly exercise after UK Chancellor of the Exchequer Jeremy Hunt announced measures to “support fiscal sustainability”.  Commodity currencies also outperformed. The Australian and New Zealand dollars rose as traders covered shorts after Chinese President Xi warning of “dangerous storms” ahead failed to spur broader selling. The euro traded in a narrow $0.9711-57 range. Bunds and Italian bonds rose alongside Treasuries as central bank tightening bets were pared. Japan's Yen traded in a narrow range, close to 32-year lows, as traders await fresh impetus to drive it lower and assess potential action from Japanese authorities. Japan’s 30-year bond yield rose to a seven-year high. In rates, Treasuries rallied, led by the belly and richer by 5bp to 8bp across the curve with gains led by front-end and belly, richening the 2s5s30s fly by almost 5bp on the day; 10-year yields around 3.945%, richer by 7.5bp on the day and lagging gilts by additional 27bp in the sector, following a surge across gilts as BOE rate-hike premium is pared after Chancellor Hunt scraps vast portions of the expansive fiscal stimulus plan that had plunged the market into turmoil. UK yields off lows of the day, although remain richer by 35bp to 40bp across the curve into early US session. UK bonds rally across the curve, led by the long-end, as the new Chancellor is expected to make a statement on the government’s fiscal plans, with the yield on 10-year gilts falling 36 basis points to 3.97% and the pound traded 1.1% higher at $1.1293. In commodities, WTI drifts 0.2% lower to trade near $85.41 as it fluctuated after a weekly slump as fears over an economic slowdown continue to weigh on the outlook for demand. French PM Borne said about 30% of the country’s petrol stations face supply issues due to a slight worsening of strikes at refineries, while Borne also stated that TotalEnergies ( TTE FP) CEO agreed to extend the fuel discount, according to Reuters. Spot gold is propped up by a softer Dollar, with the yellow metal back above USD 1,650/oz and eyeing its 21 DMA at USD 1,670.10/oz. LME metals are mixed with 3M copper losing some ground and just about holding onto USD 7,500/t+ status, whilst LME aluminium underperforms following an enormous LME stockpile increase of over 65k tonnes. Bitcoin was rangebound and holding just above the USD 19k mark at present. Looking at the day today, it's a quiet day with just the Empire Manufacturing index on deck (exp. -4.3). Market Snapshot S&P 500 futures up 0.9% to 3,630.00 STOXX Europe 600 up 0.3% to 392.36 MXAP down 0.8% to 136.71 MXAPJ down 0.6% to 442.50 Nikkei down 1.2% to 26,775.79 Topix down 1.0% to 1,879.56 Hang Seng Index up 0.2% to 16,612.90 Shanghai Composite up 0.4% to 3,084.94 Sensex up 0.6% to 58,280.17 Australia S&P/ASX 200 down 1.4% to 6,664.44 Kospi up 0.3% to 2,219.71 German 10Y yield little changed at 2.27% Euro little changed at $0.9728 Brent Futures down 0.2% to $91.45/bbl Gold spot up 0.63% to $1,654,87 U.S. Dollar Index down 0.17% to 113.12 Top Overnight News from Bloomberg UK Chancellor of the Exchequer Jeremy Hunt will accelerate plans on Monday to try to bring order to the UK’s public finances and reassure markets, after Liz Truss’s economic program triggered weeks of turmoil Chinese President Xi Jinping signaled no change in direction for two main risk factors dragging down China’s economy -- strict Covid rules and housing market policies -- providing little lift to a worsening growth outlook Double-digit inflation is set to return in the UK and linger through the end of this year despite the government’s effort to cap energy bills, a survey of economists shows Speculation intensified among Tokyo’s yen watchers that Japan may be using subtle ways to slow the currency’s decline, zeroing in on the volatility seen after Thursday’s surprise US inflation data. By one estimate, authorities may have spent around 1 trillion yen ($6.7 billion) to support the currency Further rate hikes are costs without benefits, Polish Monetary Policy member Ireneusz Dabrowski says in interview with Parkiet newspaper ECB Governing Council member Martins Kazaks said interest rates should be raised beyond year- end -- a time when economists increasingly expect the euro zone to be in the midst of a recession ECB Governing Council member Olli Rehn said financial stability risks on the international markets are “clearly increasing” EU natural gas prices fell to the lowest level in more than three months as the European Commission plans to propose a temporary mechanism to prevent extreme price spikes in derivatives trading through a dynamic limit for transactions on the Dutch Title Transfer Facility, according to a draft document seen by Bloomberg News. A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks were negative as the region took its cue from last Friday's declines on Wall St where risk assets were pressured by inflationary concerns, while the region also digested hawkish global central bank rhetoric and China sticking to its strict zero-COVID policy. ASX 200 was led lower by the commodity-related sectors and with Australian Treasurer Chalmers flagging an increase in the cost of living due to floods in the primary food growing areas. Nikkei 225 weakened with Japan said to consider a rise in corporation tax as an option to fund the nation’s defence budget which could double in the next few years. Hang Seng and Shanghai Comp. were lower following Chinese President Xi’s speech to kick-start the Communist Party Congress in which he defended the zero-Covid policy and reaffirmed intentions for the reunification of Taiwan, while attention was also on the PBoC which rolled over CNY 500bln of MLF loans and kept the rate at 2.75% which suggests a likely pause in its benchmark rates later this week. Top Asian News Chinese will delay the release of Q3 economic indicators including GDP, according to the Stats Bureau; no new date mentioned. PBoC injected CNY 500bln via 1-year MLF with the rate kept at 2.75%, as expected. China locked down nearly 1mln people near an Apple (AAPL) iPhone factory in which Zhengzhou city ordered residents in one district to stay home, according to Bloomberg. BoJ Governor Kuroda said the BoJ is continuing with monetary easing since Japan’s headline inflation is likely to fall below 2% next fiscal year, while he added it is appropriate to continue monetary easing to ensure a shift in the deflationary norm and achieve the inflation target in a sustainable and stable manner, according to Reuters. BoJ Deputy Governor Wakatabe said it is up to the Finance Ministry to decide on whether or not to intervene in the FX market and that current FX fluctuations are clearly too rapid and too one-sided. Japanese top currency diplomat Kanda said they are ready to take decisive action if excess FX moves continue and are backed by speculative trading, while Kanda reiterated that recent JPY moves were somewhat rapid, according to Reuters. BoK Governor Rhee said he does not see interest among US officials in pursuing a plaza accord to stem the dollar strength, while Rhee also stated that the BoK needs a little bit more experience and technical capacity for forward guidance, according to Reuters. South Korean Finance Minister Choo said the government will scrap taxes on foreigners’ income from Korean treasury bonds and monetary stabilisation bonds from Monday, according to Reuters. China Delays Release of GBP Data Due Tuesday, No Reason Given Xi Says China’s Power Has Increased, Warns of ‘Dangerous Storms’ EU Agrees to New Iran Sanctions Over Human-Rights Issues Mizuho CEO Eyes Expanding Investment Banking in US: Nikkei European bourses see a choppy session but have tilted towards the green after experiencing a mixed cash open. Sectors are mostly firmer with no overaching theme - Insurance, Autos, and Utilties lead the gains whilst Chemicals, Retail and Consumer Products lag. US equity futures see gains across the board following the steep losses on Friday - with the NQ and RTY narrowly outperforming Top European News BoE Governor Bailey said they will not hesitate to raise interest rates to meet the inflation target and that the Bank had to intervene to deal with the threat to the stability of the financial system, while they think inflation should peak at around 11% and his best guess is that inflationary pressures will require a stronger response than perhaps thought in August, according to Reuters. BoE Governor Bailey said he does not comment on fiscal policy but has to emphasise sustainability, while he spoke with UK Chancellor Hunt and said that there is a meeting of minds on sustainability. Furthermore, Bailey said they are going to have to stay very focused on the risks of second-round effects on inflation, according to Reuters. UK Chancellor Hunt said taking difficult decisions now is the best way to stop interest rates from rising and that the PM hasn’t changed the destination, she has changed the way we are going to get there. Hunt also commented that the PM is in charge and the last thing they need is another Conservative leadership campaign, according to Reuters. UK Chancellor Hunt said ‘yes’ when asked if he can change the mini-Budget plans and noted that the priority will be to help struggling businesses and families, while he is leaving all possibilities open when asked about government spending and stated that tax will not be cut as quickly and some taxes will go up, according to Reuters. UK Chancellor Hunt is to make a statement later today, bringing forward measures from the Medium-Term Fiscal Plan that will support fiscal sustainability, via Treasury. Hunt will deliver the full medium-term fiscal plan, to be published with OBR forecasts, on 31st October. Chancellor Hunt met with BoE Governor Bailey and the DMO head on Sunday night, to brief them on these plans. UK Chancellor Hunt is to delay plans to reduce the basic rate of income tax by a year and it was also reported that the draft forecast by the OBR fiscal watchdog sees the UK will have a black hole in public finances of up to GBP 72bln by 2027/28, according to The Sunday Times. Senior Tories will hold talks this week on a “rescue mission” that could see the swift removal of Liz Truss as leader, after the new Chancellor Hunt tore up her economic package and signalled a new era of austerity, according to The Observer. Furthermore, The Times reported that Tories held secret talks on installing a new leader and Daily Mail also reported that UK lawmakers will attempt to oust UK PM Truss this week despite warnings from Downing Street that it could trigger a general election. Reportedly almost all of Kwarteng's GBP 45bln of unfunded tax reductions is set to be scrapped by Chancellor Hunt, via FT's Parker; "including income tax cut and stuff on dividends, stamp duty, foreign shoppers and IR35." US President Biden said he wasn’t the only one who thought that UK PM Truss’s original economic plan was a mistake, according to Reuters. It was also separately reported that Goldman Sachs downgraded its UK growth outlook after the government tax U-turn. Head of UK's Unison union warned the largest nationwide strike of NHS workers since the early 1980s could occur this winter if ministers ignore calls to match pay with inflation, according to FT. BoE is publishing a market notice which sets out how energy firms and commercial lenders can apply to participate in the energy markets financing scheme; open to applications today; alongside this the UK Gov't has published a release, outlining the financing scheme and specifying that the gov't will only be liable if a firm defaults on their repayment; scheme is designed to help firms facing temporary shot-term financing problems. Europe Gas Drops to 3-Month Low as EU Plans More Crisis Measures Germany Faces $85 Billion Hit as Labor Shortages Intensify Dominant Hunt Refuses to Rule Out New U-Turn on Truss Taxes ITV Jumps as Report Says It’s Exploring Options for Studios Unit FX Pound perkier on premise that new UK Chancellor will be more frugal with public finances, Cable comfortable on 1.1200 handle and EUR/GBP probing 50 DMA just shy of 0.8650. Aussie and Kiwi recover amidst less risk-off environment ahead of RBA minutes and NZ Q3 CPI; AUD/USD hovering around 0.6250 and NZD/USD just under 0.5600. Loonie, Franc and Euro all firmer vs Greenback as DXY slips from Friday's peak to pivot 113.000, USD/CAD eyeing 1.3800, USD/CHF close to parity and EUR/USD above 0.9750. Yen propped ahead of 149.00 vs Dollar as Japanese officials turn up volume of verbal intervention. PBoC set USD/CNY mid-point at 7.1095 vs exp. 7.1331 (prev. 7.1088) Major Chinese state-owned banks were seen swapping yuan for dollars in the forwards market and selling dollars in the spot market to stabilise the local currency, according to sources cited by Reuters. Fixed Income Gilts gap-up and lead the way ahead of a potential "mini-Budget" U-turn from new Chancellor Hunt, peers buoyed in turn. Specifically, Gilt Dec'22 posts upside of over 300 ticks around the 97.00 mark with the associated 10yr yield down to near 4.0%. Amidst this, SONIA is taking a dovish-turn despite the weekend's remarks from Bailey, with pricing dipping to 'just' a ~75% chance of a 100bp increase in November. Stateside, USTs are firmer by around 15ticks with the US-specific docket comparably sparse after last week's key inputs. BoE Gilt statement: As previously announced, the Bank terminated these operations and ceased all bond purchases on Friday 14 October. As intended, these operations have enabled a significant increase in the resilience of the sector. Commodities WTI and Brent futures trimmed earlier gains in downside that was exacerbated after reports China is to delay is Q3 GDP release. French PM Borne said about 30% of the country’s petrol stations face supply issues due to a slight worsening of strikes at refineries, while Borne also stated that TotalEnergies ( TTE FP) CEO agreed to extend the fuel discount, according to Reuters. Spot gold is propped up by a softer Dollar, with the yellow metal back above USD 1,650/oz and eyeing its 21 DMA at USD 1,670.10/oz. LME metals are mixed with 3M copper losing some ground and just about holding onto USD 7,500/t+ status, whilst LME aluminium underperforms following an enormous LME stockpile increase of over 65k tonnes. CCP National Congress Chinese President Xi declared the new core mission of the party is to lead China united in the challenge to be a powerful, modern socialist nation by 2049. Chinese President Xi said they will promote a high level of opening to the outside world and will maintain pluralistic and stable economic relations with other countries. Furthermore, Xi said they will strengthen the ability to prevent and control the epidemic, while he also commented that the next five years will be crucial for building a modern socialist power and will aim for high-quality growth, as well as support the private economy unwaveringly, according to Reuters. China Communist Party spokesman Sun said China is capable of greater miracles going forward but noted China has entered a new normal of slower growth and is more focused on fixing long-term issues than growth. Sun also stated that they all hope the pandemic will end soon but what they see now is that the pandemic is still on and that their Covid prevention policy is the best and most economically efficient, according to Reuters. Chinese government officials are backpedalling on efforts to organise a meeting between US President Biden and Chinese President Xi on the sidelines of the G20 summit next month, according to Politico. Chinese President Xi said they will firmly promote reunification efforts with Taiwan and it is up to the Chinese people to resolve the Taiwan issue, while he added they will never renounce the right to use force and said reunification of the motherland must and will certainly be achieved. Chinese Communist Party spokesman Sun said achieving reunification with Taiwan by peaceful means best meets the interest of all and the use of force is the last resort under compelling circumstances, while he added that Taiwan will plunge into a disaster if pro-independence Taiwan and external forces are left unchecked, according to Reuters. OPEC Headlines OPEC Secretary-General al-Ghais said slow economic growth reflects on oil demand and that OPEC+ took the pre-emptive decision, while he added OPEC doesn’t target a specific price but targets a balance between supply and demand. Al Ghais also stated that they do not control oil prices and that their decisions are purely technical, as well as noted that there is always space for flexibility in OPEC when asked about reviewing this month’s oil output cut. Furthermore, he commented that oil markets are going through a stage of great fluctuations, according to Reuters. Iraq said OPEC+ decisions are based on economic indicators and there is consensus in OPEC+ to be pre-emptive to deal with the current uncertainty in oil markets, while it added that the OPEC+ latest decision is based on market inputs and it is essential to achieve market stability, according to a SOMO statement cited by Reuters. UAE Energy Minister said the OPEC decision was purely technical and unanimous not political as some described, according to Reuters. Kuwait said it welcomes the recent decision by OPEC+ to cut output and said it is keen to maintain balance in the oil markets for the benefit of consumers and producers, while it added that expected slow global economic growth led to more disturbance in the balance of supply and demand in oil markets, according to Reuters. Furthermore, Kuwait appointed Badr Al Mulla as its new Oil Minister and appointed Wahab Al Rasheed as Finance Minister, according to a tweet. Oman’s Energy Ministry said OPEC+ decisions are based on purely economic considerations, as well as realities of supply and demand in the market, while the decision was important and necessary to reassure the market and support its stability, according to a Tweet. Bahrain’s Oil Minister said the OPEC+ decision was reached by consensus among all member states and that OPEC+ will study any economic developments in the future to ensure the stability of markets and global supply, according to the state news agency cited by Reuters. ECB Headlines ECB’s Knot said he is increasingly convinced that rates need to rise above neutral and once rates hit a neutral level, it makes sense to consider running off APP stock, according to Reuters. ECB's Rehn said the threat of stagflation has intensified. The stability risks of international financial markets are clearly increasing. Although the global financial crisis has been avoided for now, it is not time to breathe a sigh of relief. ECB's Lane expected to propose a 75bps hike at the upcoming ECB meeting, according to an ECB insider cited by Econostream. ECB's de Guindos expects FX rate to stabilise in the coming months, via Reuters. Some ECB officials are seeing legal basis to toughen bank TLTRO terms, according to Bloomberg sources. Geopolitics Ukrainian President Zelensky said Bakhmut and Soledar in eastern Donbas are hotspots at the front with heavy fighting, while it was separately reported that that Kyiv's Mayor Klitschko said blasts hit Kyiv's city centre, according to Reuters. Russian Defence Ministry said Russia destroyed three US-made M777 Howitzers in Ukraine’s Kharkiv region and that Russian troops repelled Ukrainian attempts to advance in the regions of Donetsk, Kherson and Mykolaiv, according to Reuters. Russian Defence Ministry said 11 people were killed and 15 were wounded after two Tajikistan citizens committed an act of terrorism at a training ground in Russia’s Belgorod. US Event Calendar Oct. 14-Oct. 21: Sept. Monthly Budget Statement, est. -$50b, prior -$64.9b 08:30: Oct. Empire Manufacturing, est. -4.2, prior -1.5 DB's Jim Reid concludes the overnight wrap After numerous weeks of immense volatility, will the fact that US payrolls and CPI are out the way and the fact that the UK has sacked its Chancellor, and is gradually backtracking, bit by bit, on its recent fiscal giveaway, lead to calmer markets? We shouldn't underestimate how much the relatively small UK market has buffeted global markets in recent weeks. The politics are slowly moving in a more market friendly direction but a very sharp sell-off in Gilts on Friday afternoon left a nasty taste as we ended the week. 30yr Gilts closed +24bps on Friday to 4.79% but were around +55bps higher from the lunchtime lows. The Bank of England won't be buying today for the first time in this mini-crisis so we'll soon have a decent idea if there are still pension fund liquidity problems. Part of the reason Gilts sold off late on Friday was a global related sell-off but part of it was a buy the fact sell the rumour trade after news leaked in the morning that the Chancellor was to be sacked. PM Truss's subsequent afternoon press conference seemed to leave the market wanting more climb downs. In fact new Chancellor Hunt did extensive media rounds over the weekend saying that nothing is off the table in terms of reviewing the mini budget and that some taxes may have to rise. Several media reports suggest that the planned 1p income tax cut next April will be delayed by a year. So it’ll be fascinating to see how UK yields open up. Over the weekend, the Bank of England (BOE) Governor Andrew Bailey stated that the central bank will not hesitate to increase interest rates to meet its inflation target as it believes that the current inflationary pressures demand a stronger policy action than announced in August. In early Asia trading, the pound (+0.52%) is rallying rising to $1.1230 on the weekend's tighter fiscal commentary. Literally as we go to print, a headline has come through saying that the UK Chancellor will make a statement today on the medium-term fiscal plan. So things are accelerating rapidly. For this week China's Party Congress that started yesterday could generate plenty of headlines, with key leadership roles and priorities for the next five years in focus (see latest below). The country's Q3 GDP and key economic activity indicators will be released tomorrow. Elsewhere, housing market indicators from the US, inflation data in the UK and economic sentiment indicators from Europe will be released. Netflix, IBM, Tesla, Bank of America, and Johnson & Johnson will be among the corporates reporting as earnings season starts to gather momentum. This could be key to sentiment in the coming weeks. Let’s go through the key economic data in a little more detail now. Starting with the US, this week will feature industrial activity indicators such as industrial production (Tues) and the Empire manufacturing index (today). For the former, our US economists expect a -0.4% print (-0.2% in August). The housing market will be in focus too, with fears over a big softening on one hand but balanced in the short-term by last week's CPI print that showed strong momentum in rents. The releases will include housing starts, building permits (both Weds) and existing home sales (Thurs). Over in Europe, the UK will continue to be in the spotlight with CPI, RPI and PPI to be released on Wednesday with the first expected at 10.1% (August CPI printed at 9.9% YoY and below July's 10.1%). Staying in the UK, October GfK consumer confidence figures will be released as well as September retail sales on Friday. Elsewhere in the region, sentiment indicators will include the ZEW survey for Germany and the Eurozone tomorrow and business and manufacturing confidence for France on Thursday. We will get the PPI for Germany on the same day. In politics, the European Council's two-day meeting will start on Thursday with topics of Ukraine, energy and the economy on the agenda. In Asia, China's Q3 GDP, industrial production and retail sales, along with other indicators, will be released tomorrow. The median estimate on Bloomberg points to a +3.4% YoY reading, up from +0.4% in Q2. On Friday we will also get the nationwide CPI from Japan and our Chief Japan economist expects core inflation excluding fresh food to show a +2.9% YoY increase (+2.8% in August) and core-core inflation excluding fresh food and energy to rise by +1.8% (+1.6% in August). Durable goods and food prices are seen as the core inflation drivers. Finally, this week will be packed with corporate Q3 results from key American and European firms as this earnings season ramps up. The tech names we will hear from include Netflix, ASML, IBM and Lam Research, with hardware makers particularly in focus amid slowing demand concerns. Other notable reporters will include Johnson & Johnson, Lockheed Martin, Tesla, Bank of America (today), Procter & Gamble, and Goldman Sachs. The day by day week ahead guide at the end has which days each report. Asian equity markets are trading in negative territory at the start of the week, following a weak close to the week in the DM world, although US futures are up as we start the week. Across the region, the Nikkei (-1.43%) is leading losses with the Hang Seng (-1.16%), the CSI (-0.45%) and the Shanghai Composite (-0.10%) also trading lower. The KOSPI is flat. Contracts on the S&P 500 (+0.43%) and the NASDAQ 100 (+0.39%) are both edging up. Over the weekend, Chinese President Xi Jinping, in his speech at the opening ceremony of the ruling Communist Party of China’s 20th National Congress, gave a defiant message to the world as he warned against “interference by outside forces” in Taiwan. At the same time, he reiterated the validity of the Zero-Covid policy while signaling that there would be no immediate loosening in restrictions despite the social and economic pain caused by the policy. Staying on China, The People’s Bank of China (PBOC) announced that it will maintain its 1-yr Medium-Term Lending Facility (MLF) interest rate at 2.75% for the second consecutive month while injecting liquidity worth 500 billion yuan into the banking system through MLF operations. So far in 2022, the MLF rate has been cut by 20bps with 10bps moves in January and August. In FX, the Japanese Yen dropped to 148.77 against the US dollar, a fresh 32-year low, before easing to settle at 148.70. Meanwhile, yields on 10yr USTs are trading just below 4% level (-2.5bps) as we go to press. Looking back on last week now, yet another upside CPI surprise ruined any chance of a near-term Fed policy pivot, driving yields higher and the curve flatter. All told 2yr Treasury yields were +19.0bps higher on the week (+3.5bps Friday) while the 10yr climbed +13.5bps (+7.3bps Friday). That left the 2s10s curve at -48bps, near its most inverted levels of the cycle, as additional tightening and a harder landing was priced in. By the end of trading, markets were pricing +142bps of tightening through the next two FOMC meetings. That’s close to our updated US Economic call of +75bp hikes in November and December, but markets are pricing some risk of +100bps in November following the blockbuster CPI, with +78.6bps priced at the end of last week. The S&P 500 staged a befuddling rally the day of the print (with a 5.5% turnaround) but ultimately retreated -1.55% (-2.37% Friday) on the week. In line with tighter expected policy, the NASDAQ underperformed, falling -3.11% (-3.08% Friday). The moves came with huge intraday swings, which had the Vix index of volatility close above 30 every day, closing the week at 32.02, just beneath the year’s high of 36.45 reached when Russia invaded Ukraine. US banks kicked earnings off in earnest on Friday. As you might expect, FICC revenues have held up given the heightened volatility, and net interest income improved with the blistering pace of Fed rate hikes, while deal making revenue has slowed given the gloomy economic outlook. All told, the S&P 500 banks advanced +2.43% on the week (+0.03% Friday), outperforming the broader index. In Europe, yields also took another leg higher, with 10yr bunds +15.2bps higher over the week (+5.9bps Friday). However, the curve steepened, with 2yr bunds gaining +9.0bps (+3.5bps Friday). The biggest story was of course in the UK, with the Chancellor gone and the partial u-turn on the budget. That led gilts to outperform bunds, where 10yr gilts gained +9.7bps (+13.7bps Friday) and 2yr gilts fell -25.4bps (+11.6bps) as some near-term crisis management hikes were priced out of the market. However as mentioned at the top 30yr Gilts were still an issue, climbing +39bps in a volatile week (+24hrs Friday). European equities fared much better than the US. The STOXX 600 pulled back just -0.09% (+0.56% Friday), with the DAX (+1.34%, +0.67% Friday) and CAC (+1.11%, +0.90% Friday) both out-performing. Tyler Durden Mon, 10/17/2022 - 07:49.....»»

Category: blogSource: zerohedgeOct 17th, 2022

What Lurks Below The Surface Is A Reason For Concern

What Lurks Below The Surface Is A Reason For Concern Authored by Bruce Wilds via Advancing Time blog, With every pop upward in the markets, many of us are forced to ask ourselves, am I too negative and bearish? After a bit of soul searching logic seems to indicate we are simply being realistic. There is a reason to be concerned.  The sharp stock market rallies we have had are mostly a result of bears with tight stops creating a panic short-covering frenzy when anyone comes in buying. Still, it is an important thing to remember that many of our problems remain hidden below the surface of everyday finance. Yes, What Is Below The Surface Matters Currently, the market action of violent moves up and down is whipsawing investors out of their money.  This market is structured in a way that destroys true price discovery. Stock buybacks and other quirks and tax tricks have created a disconnect between value and stock prices. This has been exacerbated by money flowing into ETFs that mainly feed into just a few stocks. Those of us that are convinced this economy is at the end of its rope and the financial system is coming apart have been using negative words for a long time. Just a week ago I heard the top 10 mega-cap stocks make up more than 31% of the total S&P 500 stock index. If this is true, and I suspect little has changed. It could be argued that we will need a totally new view of the market's structure before things will change. Money continually flows into the stock market because if it sits on the sidelines or in the bank. inflation nibbles away at its buying power. This has made the current market system appear more resilient than it is. The problem is that when you eliminate true price discovery from a market, words such as bogus, manipulated, and rigged begin to appear. Still, every time it appears the final knife is about to be thrust into the heart of this market, we see a rally occur that encourages bulls to rush in and buy the dip.  World's largest Cruise Ship Set To Be Cut Apart All over the world, just below the surface and out of sight, issues are surfacing that highlight how complex the economy has become. An example of this is the news that the world's largest cruise ship, an 80% finished, 9,000-passenger, 1,122-foot ship, the Global Dream II is about to be cut apart for scrap. Most people never hear of things like this because the evening news is more centered on demonizing former President Trump by covering the January 6 event or feeding us "inspirational stories" such as how a young girl is donating her lunch money to feed others. Considering all that is going on across the world, it seems odd so many people are already asking whether the bottom has been put in and markets are about to resume an upward path. We can blame this on the lies and economic wisdom that is presented by mass media. Their narrative conveniently forgets that consumers appear to be entering a time of protracted weakness. This is becoming clear as total consumer credit continues to rise. Data shows it just rose $32.2 billion, well above last month's $26 billion. Meaning, total revolving consumer credit is making new all-time highs at just over $1.15 trillion at the same time credit card APRs move ever higher. It is pie in the sky thinking to take the position wages will move up while prices return to normal and all is well. Insane amounts of new debt and wild government spending have brought us to the place where we are now talking about trillions of dollars rather than billions. The idea we can simply bail out every failed pension and enterprise to make everyone whole is problematic. Unfortunately, lurking just below the surface are far more of these troubling situations than most people are willing to admit. This Is An Indication Of Problems Ahead How can we expect pension funds to remain solvent when stocks are not going crazy up and low-risk bonds pay so little? How can small community businesses compete against huge predatory companies such as Amazon? Why do people want to work when they find out the government is willing to take care of them? Why do we rush to blow up cities, countries, and pipelines rather than work to resolve disputes in more civilized ways? Each of the questions above gives me a reason to be negative. At the same time as bubble assets deflate, prices of goods and services may have started an inflationary cycle of a magnitude that the world has never experienced before. While inflation has been a problem in individual countries in the past, what we are seeing today is occurring on a global scale. Please don't throw this article into the doom porn basket but take the time to think about what is lurking below the surface of our financial system unless you can't handle the truth. That truth is staring at you below. This Image Screams An Ugly Truth As pointed out above, the data we are seeing indicates retail sales are increasingly being funded by soaring credit card debt. This is a sign that consumers are struggling to maintain their standard of living. This is the reality we must face. When people retire poor society becomes their backstop and will find it has to carry them on its back. The national debt of the United States just passed 31 trillion dollars. The growing burden of providing for those in poverty bodes poorly for the national deficit going forward. In the first minute of a just-released video about the economy, Jeremy Grantham carves away the illusion the underpinnings of this market are strong. There are so many holes in our financial system that it is only being held up by air. Don't expect things to suddenly improve. What lurks below the surface of our financial system is a reason for concern and indicates our troubles have just begun. We ain't seen nothing yet. Tyler Durden Mon, 10/10/2022 - 07:20.....»»

Category: dealsSource: nytOct 10th, 2022

How To Classify The Different Types Of Annuities

Future retirees have a lot to look forward to. Besides traveling, spending time with family, or picking up new hobbies, the number of U.S. centenarians increasing from 53,000 in 2010 to over 90,000 in 2020. In addition, we’re likely to see 130,000 Americans celebrate their 100th birthday by 2030, according to the U.S. Census Bureau. […] Future retirees have a lot to look forward to. Besides traveling, spending time with family, or picking up new hobbies, the number of U.S. centenarians increasing from 53,000 in 2010 to over 90,000 in 2020. In addition, we’re likely to see 130,000 Americans celebrate their 100th birthday by 2030, according to the U.S. Census Bureau. Considering that, what does it mean for how we fund retirement? It’s essential to invest in a nest egg that will last us a lifetime, as we have a lifetime ahead of us and more passions to pursue. With that said, the right retirement annuity can help you prepare for a long and fulfilling life in retirement. .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Ray Dalio Series in PDF Get the entire 10-part series on Ray Dalio in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q2 2022 hedge fund letters, conferences and more   Find A Qualified Financial Advisor Finding a qualified financial advisor doesn't have to be hard. SmartAsset's free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you're ready to be matched with local advisors that can help you achieve your financial goals, get started now. What Are Annuities? Annuities are contracts between you and an insurer guaranteeing lifetime income after retirement. You can pay the insurer a lump sum or a series of premium payments in exchange for retirement income payments. You will begin to receive those payments based on when you plan to retire and what type of annuity you purchase. Investing in annuities can help you ensure that you will not outlive your money when planning your retirement income. Regular payments are also convenient since once you choose your annuity, the payments will be made according to your contract terms. Annuity contracts have two stages. During the accumulation stage, you will save for retirement and potentially grow your funds as you build your annuity’s cash value. When you’re ready to begin spending the money in retirement, you’ll begin the distribution phase. In annuities, this is called annuitization. But, it’s simply converting the annuity into regular payments. Depending on the type of annuity you purchase, you will build retirement funds and cash value (accumulation) and convert those funds into guaranteed income (distribution). Payout Options for Annuities – When and How Long You Receive Payments Annuities can be defined as immediate or deferred payments, depending on their payout options. Basically, these describe how you’ll get your annuity income after you pay your premiums. Immediate Annuity For people who need a regular income stream in retirement right now, immediate annuities are the best option. After receipt of the investment, payments begin within one to twelve months. Owners pay the insurance company a lump-sum amount (premium) to guarantee monthly payments to the annuitant for the rest of their lives or for a specified period. Due to the inclusion of principal and interest, payments are typically higher than other annuities, offering a favorable tax treatment. Purchasing an immediate annuity can supplement Social Security and pension income, which are rarely sufficient to cover retirement expenses. It can also help to pay for healthcare premiums. Additionally, these are popular among retirees and pre-retirees who need a lifelong income stream that is higher than average but are willing to sacrifice the principal. Deferred Annuity Deferred annuities are short-term investment products offered by life insurance companies to help people prepare for retirement. These annuities offer tax-deferred growth over time, making them attractive to people who value the ability to grow their capital over time. Basically, these are for people who want to create a ladder of income over time rather than a guaranteed income now. As an example, they could desire to work in retirement. But know that eventually, they will stop working and will need annuity income at that point. Until retirement, they “defer” the steady flow of income. During times of low-interest rates, they are attractive alternatives to traditional bank savings products because they tend to offer higher interest rates. Rates on deferred annuities are usually locked in for a specified period, known as the guarantee period. These periods typically last one, three, five, or seven years. Therefore, deferred annuities can be a good choice in times of stock market volatility due to the rate guarantees. Also, they offer excellent protection. And, to sweeten the pot, the growth of assets is also earmarked for future healthcare expenses. How Long Annuities Are Paid by Type Lifetime Annuity In many ways, a lifetime annuity functions as a personal pension plan. The reason? They provide lifetime income and are sometimes referred to as “single life,” “straight life,” or “non-refund.” However, additional payments can be made for a spouse or dependent. In this case, the annuity is known as “Joint and Survivor.” This annuity generally provides income for life, although some may offer payments for a specified period of time. In retirement, a lifetime annuity can be used as a supplement to Social Security checks, 401(k) plans, or pension funds provided by companies. Even after the money you contributed to the annuity is exhausted, you can still receive income from it for the rest of your life. They may be useful for you if you wish to establish a regular and guaranteed income stream. Your beneficiaries will receive the payment option you chose when you purchased the annuity if you pass away before all the funds have been used up. In some cases, you may not be able to distribute anything to your dependents or other beneficiaries. As a result, you will receive an income you cannot outlive. A straight life annuity can make sense for you if you don’t intend to use the money invested for dependents or other beneficiaries. Fixed-Period Annuity Fixed-period annuities, or term-certain annuities, payout for a specific period of time. Payments from this type of annuity are spread out over a fixed period. In other words, you get payments for a specified period with this option. Regardless of whether you’re still alive, you won’t get payments after that. This contrasts with lifetime annuities, where payments are made throughout your lifetime. Time periods can range from five to twenty years or even longer. There are no health or age restrictions on annuities like these. However, fixed-period annuities earn little to no interest. In addition, you may outlive the fixed period, which is the biggest risk. Annuities by Growth – How Your Annuity Will Grow There are three main types of growth annuities: fixed, variable, and fixed indexed. Annuities of this type allow you to preserve your investment while gaining higher returns. Fixed Annuity The simplest type of annuity is the fixed one. If you agree to a specific length of the guarantee period, the insurance company will guarantee a fixed interest rate on your investment. For example, the interest rate could last for a year or the whole duration of your guarantee. If your contract is over, you can either annuitize it, renew it, or move your money into another retirement account or annuity. Your monthly payments will be exactly the same because fixed annuities are based on a guaranteed interest rate, which does not fluctuate based on market volatility. However, your payments will also not keep up with inflation if there is a potential upswing in the market. Therefore, annuities should not be used for retirement income generation but for growing income during the accumulation phase. A fixed annuity has the disadvantage that it is guaranteed to earn a lower minimum rate of return than its counterpart. However, it also has a maximum rate of return. Multi-Year Guaranteed Annuity (MYGA) MYGAs are types of fixed annuities that are guaranteed for a specified period. It offers a fixed interest rate for a specified period – usually three to 10 years. In general, MYGAs are most suitable for retirees looking to defer taxes while ensuring a return. Variable Annuity Variable annuities are tax-deferred annuities that combine the benefits of a 401(k) plan and an annuity contract that guarantees an income for a lifetime. In time, you may be able to keep up with inflation or even surpass it with your sub-accounts. The performance and risk of sub-accounts are similar to those of mutual funds. Therefore, you will receive a higher payment if your subaccounts do well or a smaller payment if they do not. In addition to a death benefit, variable annuities also offer an income rider that guarantees income to your beneficiaries as well. Suppose you’ve maxed out your Roth IRA or 401(k) contributions and would like the security and comfort that comes with guaranteed income. In that case, a variable annuity can be a great addition to your retirement income plan. Again, this type of annuity can be risky due to the performance of selected investments. And, it can have high fees compared to other types of annuities. Fixed-Index Annuity Essentially, these are fixed annuities with a variable interest rate added to your contract value if the underlying market index, such as the S&P 500, rises. As a result, they often provide a market-driven upside possibility and a guaranteed minimum income. The downside is the limitation of upside potential by participation rates, caps, or spreads – all ways to reduce your return on a rising market. Due to this, buyers of these annuities cannot keep up with market changes. In addition to providing principal downside protection, these products appeal to retirees and pre-retirees who want to participate in potential market gains conservatively. One more thing. Your annuity payments are calculated based on interest rate risk. A low level of risk yields predictable payments. On the flip side, expectations could be boosted by higher risk. Annuities by Premium – Which is Best for You? Deferred annuities can be purchased with a lump-sum premium or in installments. Flexible-Premium Annuity You can purchase a flexible premium annuity by paying premiums over time. These are only available as deferred annuities, in which you make payments over a long period and receive a payout later. Depending on the annuity company, you may be given the option to contribute without following a schedule or making minimum payments. Single premium immediate annuity (SPIA) In less than 12 months, you can begin collecting a steady income stream after making a single lump-sum payment. Alternatively, it is known as an income annuity or immediate annuity. People near retirement prefer them, accounting for only about 10% of annuities sold annually. Other Annuity Choices Besides the most common types, there is a wide variety of annuities. Again, you can customize these to suit your specific needs and long-term financial goals. In addition to traditional IRAs and 401(k) plans, qualified retirement accounts offer tax breaks. And the payment of an annuity can also be continued after your death if you choose to do so. Life-only annuities. Also known as single life annuities or straight life annuities, these pay a lifetime income to the owner alone. However, they do not pay income to a spouse or other beneficiary. Long-term care annuities. If you need long-term care in the future, these are tax-deferred annuities with a rider. Life annuities with period certain annuities. For a set period of years, these provide lifetime income. Any remaining payments will be made to your spouse or other beneficiaries upon your death. Joint and survivor annuities. So long as one spouse is alive, these make monthly payments. Group annuity contracts. Employees receive these benefits as part of their retirement benefits. Finding the Right Annuity Type for You Every annuity type has its own pros and cons. Depending on your current financial situation, different types of annuities may be better suited to helping you achieve your long-term financial goals. Additionally, factors like years until retirement, risk tolerance, and retirement goals must be taken into account. The number of years until retirement. Investing in a deferred annuity may be the best option for those who don’t require current income and wish to accumulate money tax-deferred. Annuities with deferred payments come in several varieties, including fixed, fixed-deferred, and variable. With deferred annuities, you can accumulate significant assets before retiring. The type of deferred annuity you choose will depend on how much risk you can tolerate. Tolerance for risk. To determine your annuity risk tolerance, you should consider two main factors: How close you are to retirement and how much money you currently have. A person near retirement has a lower risk tolerance than someone who isn’t planning to retire anytime soon. The best bet in this situation may be a fixed annuity. On the other hand, a variable annuity may be a better option for you if retirement is a distant dream, as you have more time to recoup losses. Furthermore, you may not want to risk your assets in a high-risk annuity if you have low-to-moderate assets. A variable or fixed indexed annuity might be the right option for adventurous investors with enough money. In either case, you should define your retirement goals and understand your risk tolerance before purchasing an annuity. Retirement goals. Your retirement goals might be the most important factor when choosing an annuity. For example, fixed immediate annuities are ideal for those who prefer to live at home and want to cover basic living costs with a guaranteed income stream in retirement. For world travelers with significant assets, you may want to defer payouts to let your money earn while you travel. You may benefit from a variable deferred annuity if that is the case. As you begin your retirement journey, there are annuities available that can meet your specific needs. However, it is possible to compare several different annuities with a financial professional’s help to determine which is best suited for your needs. FAQs Why buy an annuity? As an immediate payment (lifetime annuity), annuities can guarantee a lifetime income stream. There aren’t many financial instruments that can offer this kind of value. You can accumulate funds tax-deferred when you purchase a deferred annuity. Annuities can offer rates of return that far exceed those of savings accounts and CDs. Annuities are a smart investment choice for diversified portfolios due to their tax deferral benefits and guaranteed lifetime incomes. In what ways are annuities classified? In terms of annuity types, there are several ways to categorize them. An example is the types of annuities based on payout, growth, and premium options. When buying annuities, people tend to consider these factors the most important. What are the main types of annuities? Annuities can be paid out immediately or deferred, depending on how you want to receive the money. When you pay a lump sum premium for a single premium immediate annuity (SPIA), a steady income stream is immediately generated. With deferred annuities, you can pay premiums over time while receiving payments months or years in the future. Annuities that grow over time are called growth annuities. Your contributions are guaranteed a fixed interest rate over a certain period with fixed annuities. A variable annuity pays a return based on the performance of its subaccounts – the funds invested with your premium payments. Market indexes such as the S&P 500 and Dow Jones Industrial Average are used to calculate fixed-indexed annuity payments. The type of annuity you choose can also depend on how you want to pay your premiums. The amount and frequency of premium contributions can be adjusted with a flexible premium annuity. In a single premium immediate annuity (SPIA), a single premium is required, and payments begin immediately. What is the best type of annuity product? There is no one-size-fits-all annuity. Annuities should be chosen based on your current financial situation and long-term financial goals. In order to find the annuity that best fits your goals and needs, you must compare different annuities. When choosing an annuity, you should consider how you will pay, what kind of growth and payout you are looking for. How do you fund your annuity? Annuities can be purchased using qualified or non-qualified funds. A qualified annuity can be purchased with pre-tax dollars. In other words, this is income that hasn’t been taxed yet. An individual retirement account (IRA) or 401(k) is the most common source of these funds. Also, IRS-mandated required minimum distributions (RMDs) apply to qualified annuities. At 72, qualified annuity owners must begin receiving distributions from their accounts. Alternatively, you can use non-qualified dollars to fund your annuity. In the case of non-qualified annuities, they are post-tax. So your annuity will be funded with income you’ve already paid taxes on, perhaps from savings accounts or CDs. In relation to non-qualified dollars funded annuities, there are no restrictions regarding when you must take distributions. Article by John Rampton, Due About the Author John Rampton is an entrepreneur and connector. When he was 23 years old, while attending the University of Utah, he was hurt in a construction accident. His leg was snapped in half. He was told by 13 doctors he would never walk again. Over the next 12 months, he had several surgeries, stem cell injections and learned how to walk again. During this time, he studied and mastered how to make money work for you, not against you. He has since taught thousands through books, courses and written over 5000 articles online about finance, entrepreneurship and productivity. He has been recognized as the Top Online Influencers in the World by Entrepreneur Magazine and Finance Expert by Time. He is the Founder and CEO of Due......»»

Category: blogSource: valuewalkOct 6th, 2022

"Global Gloom": World Markets Plunge To Start The Week As Global Currency Crash Hits Max Pain And Beyond

"Global Gloom": World Markets Plunge To Start The Week As Global Currency Crash Hits Max Pain And Beyond The rout which hammered stocks on Friday, nearly pushing them to close at a new 2022 low, resumed overnight when the global FX crisis returned with a bang, and a flash crash in the British pound which as noted late last night, plummeted 500pips in thin trading, to fresh record lows following Friday's shocking mini-budget announcement which confirmed the UK has no idea what it is doing and will cut rates and issue more debt just as the BOE is desperately trying to tighten financial conditions. The plunge in cable was however just one symptom of a bigger malaise, namely the relentless surge in the dollar which overnight hit fresh record highs as the BBDXY rose as high as 1,355 before briefly fading the surge... ... as every dollar-denominated debt issuer in the world is suffering crippling pain and begging Powell to do something to ease the unprecedented shock of the strongest dollar in history just as the world slumps into a global depression. Alas, so far there is nothing but silence from the Fed - which will likely have to make some announcement on central bank currency swaps at some point before the open today to avoid an even more epic FX rout - and as traders await something to break big time across global markets... This is the week of the barbell trade: deep OTM calls and puts as things either break or CBs panic. — zerohedge (@zerohedge) September 26, 2022 ... this morning futures have tumbled another 0.7%, as eminis drop to 3,683 while Nasdaq futures are down 0.8% to 11,290 on fears that Federal Reserve rate hikes to combat persistently elevated inflation will crush the economy into a full-blown recession, or depression, and the VIX soared above 32. It wasn't just FX and stocks crashing: British bonds also cratered as yields surged to the highest in more than a decade, sparking talk of emergency action by the Bank of England. For one example of the total chaos look no further than 5Y UK Gilts which have exploded 51bps higher and last traded around 4.58% as the market now prices in Similar implosions were observed in US TSYs, where the 10Y traded just shy of Friday's mini blowout, and was last seen at 3.7828% as bond traders are hit by VaR shocks at the same time in every possible market. Turning back to stocks, the rout wasn't isolated to just one market and an index of global stocks traded to the lowest since 2020. European equities extended declines after sliding into a bear market on Friday, with mining and energy stocks underperforming as metals and oil fell. “We’re in a period of global gloom, with pessimism blanketing different countries for different reasons,” said Ed Yardeni, president of his eponymous research firm, who warned of growing storm clouds for the US economy. “The latest data jibe with our growth recession scenario, but the risks of a full-blown recession are obviously increasing,” he wrote in a note Monday. In premarket trading, major US tech and internet stocks including Apple, Amazon and Microsoft tumbled. Here are some other notable premarket movers: Farfetch (FTCH US) shares fall as much as 4.43% in US premarket trading, after Citi begins coverage of the luxury online retailer with a sell rating, with broker flagging “weak” underlying profitability. Shares of US-listed Macau casinos jump in premarket trading, after Macau government said tour groups from mainland China could resume as early as November. Wynn Resorts (WYNN US) jumps 5.4%; Las Vegas Sands (LVS US) +6.9%, Melco (MLCO US) +9.6% and MGM resorts (MGM US) +1.6% Cryptocurrency-exposed stocks edged higher in premarket trading on Monday as Bitcoin rose above $19,000. Marathon Digital (MARA US) +1.9%, Coinbase (COIN US) +0.4% Keep an eye on Diana Shipping (DSX US) and Safe Bulkers (SB US) as Jefferies downgraded them to hold from buy and lowered dry bulk estimates to reflect the decline in dry bulk charter rates. European shares extended their fall to Dec. 2020 lows; sliding 1% and extending losses as investors priced a major economic shock and recession. The Stoxx 600 Index was down 1% by 10:50am in London, touching its lowest since December 2020, with real estate and banks among the worst performing sectors, while technology shares outperformed. Italy’s FTSE MIB bucked broader European declines to trade little changed, after Giorgia Meloni won a clear majority in Sunday’s election, in line with expectations. Banks and real estate stocks were the worst-performing sectors in Europe on Monday, with declines led by UK stocks as the pound and UK bonds slump. The Stoxx 600 Banks Index and the Stoxx 600 Real Estate are both down at least 2.5% while the benchmark gauge is 1.1% lower. The bank index decline is led by UK names including Virgin Money (-10%), Lloyds (-4.6%) and NatWest (-4.5%). Virgin Money was today resumed with a hold rating at Berenberg; broker said that the lender is expected to see revenue declines and a sector- lagging return on tangible equity which will affect ability to re-rate. Among real estate stocks, the UK’s Safestore Holdings (-4.2%), Assura (-3.9%) and Derwent London (-3.8%) are among the worst performers; non-index member housebuilders, including Persimmon, Bellway and Taylor Wimpey, are also plunging as the pound’s slump prompts talk of emergency action by the Bank of England. Here are the most notable movers today: The Stoxx 600 Tech Index rises as much as 2.4%, set for its biggest one-day outperformance against the broader Stoxx 600 since early-August, with semiconductor stocks leading gains. Among chip stocks, ASML rose as much as +3.7% after Santander upgraded the stock to neutral from underperform Italy’s FTSE MIB index gains, bucking weaker markets in Europe, after Giorgia Meloni won a clear majority in Sunday’s election. While the outcome was in line with expectations, the fact that the coalition didn’t obtain a super majority needed to change the constitution reassures investors. Telecom Italia rose as much +7.4%, FinecoBank +5.1%, Moncler +4.4% Unilever shares rise as much as 3.7% after it announced that CEO Alan Jope will retire from the company at the end of 2023, in a move that Jefferies analyst Martin Deboo (buy) sees as a positive development. RPS Group shares rise as much as 13% after Tetra Tech’s agreed deal to buy the company at 222p/share in cash, representing a 7.8% premium to an offer WSP made in August. Liberum does not rule out a counterbid. Belimo shares rise as much as 8.5% since the market isn’t fully pricing in its growth outlook, Berenberg says in a note, moving to buy and establishing a Street-high CHF440 target. The stock gains as much as 8.1%, the most since March 2021. Zalando shares rise as much as 4.8% after Citi analyst says they like the long-term investment story, short-term earnings risks are still high. UK Domestics: the most remarkable reaction to Friday’s not-so-mini budget, however, might be in lenders’ shares. The decline in banking stocks reflects investors’ pessimistic view on Britain’s economy. HSBC fell as much as 2.9%; Lloyds -4.3%, NatWest -4.7% and Barclays -3.0%. Virgin Money UK shares drop as much as 10% after Berenberg resumed a hold rating in note, stating that in many ways the UK small banks are “more different than they are alike.” Utilities are the day’s worst-performing European sector. Citi analyst Piotr Dzieciolowski says the EU’s funding for its policy response has so far been insufficient and also expects uncertainty to persist for UK names. United Utilities fell as much as -3.4%, Drax -3.8% Geopolitical risks from the war in Ukraine to escalating tensions over Taiwan and unrest in Iran also weighed on sentiment. Meanwhile, the OECD cut almost all growth forecasts for the Group of 20 next year while anticipating further interest-rate hikes, and a gauge of German business confidence deteriorated. Earlier in the session, a rout in Asian stocks extended into Monday as rising concerns about a global recession and weak demand hit the region’s exporters and materials producers. The MSCI Asia Pacific Index declined as much as 2.3% to the lowest since April 2020, dragged lower by TSMC, BHP and Toyota Motor. All but one sector traded lower with materials leading the slump.  South Korean stocks fell the most in the region, with the benchmark tumbling 3% to more than a two-year low. The Korean market’s heavy tech exposure has proven costly amid rising rates and a stronger dollar, with fears that a looming recession may wreak havoc on global demand. Gauges in Hong Kong and China reversed earlier gains as the region’s selloff intensified.   Korea Assets Are Asia’s Biggest Losers on Global Recession Angst “Investor sentiment is again at the stage of extreme fear,” said Lee Kyoung-Min, an analyst at Daishin Investment. “It is becoming solid and clear that Kospi and other global stock markets are on a mid-to-long term downward trend.” Asian stock benchmarks are being buffeted by global headwinds as well as risks of their own. The Federal Reserve’s relentless rate hike campaign is pushing Asian currencies lower and raising the risk of capital outflows, while China’s adherence to Covid Zero is hurting growth in the region’s economic giant.  If Monday’s losses are extended through the week, the MSCI Asia Pacific Index will see its longest run of declines since 2015. Japan stocks declined more than 2% as the nation resumed trading after a holiday on Friday. The Philippine stock market was closed Monday as Super Typhoon Noru barreled into the main Luzon island.  Among the key issues investors are watching this week are speeches by central bank officials in US and Europe, including Fed Chair Jerome Powell on Tuesday. Japanese equities tumbled as the market reopened following a three-day weekend, tracking US peers lower after the Fed’s hawkish comments last week deepened fears of a global downturn. The Topix fell 2.7% to close at 1,864.28, while the Nikkei declined 2.7% to 26,431.55. Toyota Motor contributed the most to the Topix decline, decreasing 3.2% after its monthly production update lagged expectations. Out of 2,169 stocks in the index, 145 rose and 1,985 fell, while 39 were unchanged. “There is a possibility that inflation will not subside and interest rates will rise further, which the markets will not like,” said Shoji Hirakawa, a chief global strategist at Tokai Tokyo Research. In Australia, the S&P/ASX 200 index fell 1.6% to close at 6,469.40, as energy and mining shares plummeted. An energy gauge including oil and coal linked securities declined by the most since March 2020.  The New Zealand market was closed for a holiday In India, key stocks gauges plunged to their lowest closing levels in almost two months as the global equity rout continues. The S&P BSE Sensex dropped 1.6% to 57,145.22 in Mumbai to its lowest since July 28. The NSE Nifty 50 Index fell 1.8%, its biggest single-day plunge since Sept. 16. Both the indexes, down in four of the past five weeks, have lost almost 6% since this month’s peak. Volatility in domestic equities is likely to remain elevated this week, pending monthly derivatives expiry on Thursday. Of 30 shares in the Sensex index, 24 fell and 6 advanced. All but one of the 19 sector sub-indexes compiled by BSE Ltd. declined, led by utilities and power companies.  The Indian rupee weakened to a new record against the dollar amid surging US Treasury yields. The Reserve Bank of India’s rate-setting panel will announce monetary policy later this week. As noted above, while stocks are ugly, rates are a horrorshow as Treasuries extended their worst bond slide in decades as a dollar gauge rose to yet another record. Treasuries extended losses in a bear flattening move with yields cheaper by up to 10bp across the belly of the curve. US 10-year yields around 3.78%, cheaper by 6bp on the day with 5s30s spread flatter by 5bp, dropping as low as -45.4bp in European session; UK yields cheaper by 60bp to 25bp from front- end out to long-end of the curve. The Move comes as market participants brace for accelerated policy tightening from global central banks and headlines such as this: *TRADERS PRICE IN UP TO 200BPS OF BOE RATE HIKES BY NOVEMBER Yields on 2-year gilts are 60bp cheaper heading into early US session, while the pound recovers slightly after reaching a fresh all-time low. US session focus on 2-year auction, while a barrage of Fed speakers are expected for the week. Peripheral spreads widen to Germany with 10y BTP/Bund widening 7bps to 238bps. FX, of course, is a disaster, with the Bloomberg Dollar Spot Index rising a fifth consecutive day as the greenback advanced versus most of its Group-of-10 peers. The pound plunged almost 5% to $1.0350 in Asian trading, the lowest recorded in Bloomberg data going back to 1971, while gilts crashed after the UK government vowed to press ahead with more tax cuts, stoking fears that new fiscal policies will send inflation and debt soaring, triggering emergency rate hikes. The options market signals no respite even as the pound rebounded from a record low hit during the Asia session. The yield on two- year bonds surged more than 55 basis points to 4.51%, while the 10-year yield rose 37 basis points to 4.19%. Money markets price in more than 150 basis points of rate increases by the BoE’s next policy meeting in November The euro steadied after earlier dropping to $0.9554; European bond yields rose; Italian bonds underperformed German peers. Giorgia Meloni won a clear majority in Sunday’s Italian election, setting herself up to become the country’s first female prime minister at the head of the most right-wing government since World War II. Germany’s IFO business expectations slid to 75.2 in September from 80.3 in August. That’s the lowest since April 2020. Analysts had predicted a drop to 79. An index of current conditions also fell. The Australian and New Zealand dollars pared some losses after earlier touching fresh 2-year lows. Aussie bond yields rose by up to 13bps, led by the front end The yen weakened amid a broadly stronger dollar. Bank of Japan Governor Haruhiko Kuroda said the government’s intervention in the foreign exchange market last week was appropriate given the recent volatility in the yen The currency’s rally is “untenable” for risk assets, according to a note by Morgan Stanley strategists led by Michael Wilson, while Sian Fenner, senior Asia economist for Oxford Economics, said that “It’s a king US dollar...“It’s adding to inflationary pressures and more central banks raising rates more than we have historically seen.” In commodities, WTI slides almost 1% to trade near $78/bbl. Spot gold mostly unchanged near $1,643/oz. Bitcoin climbs above $19,000. Trading this week will be punctuated by a number of economic reports including US initial jobless claims and gross-domestic-product data, along with PMI figures from China. Choppiness in price moves is likely with a steady stream of Federal Reserve officials speaking through the week. Looking at today's calendar, we get the September Dallas Fed manufacturing activity index, and the August Chicago Fed national activity index. Central bank speakers include the Fed's Bostic, Collins, Logan and Mester; ECB's Lagarde also speaks as does Nagel, Guindos, Centeno and Panetta speak, BoE's Tenreyro speaks. Market Snapshot S&P 500 futures little changed at 3,706.25 MXAP down 2.0% to 142.24 MXAPJ down 1.4% to 463.08 Nikkei down 2.7% to 26,431.55 Topix down 2.7% to 1,864.28 Hang Seng Index down 0.4% to 17,855.14 Shanghai Composite down 1.2% to 3,051.23 Sensex down 1.2% to 57,378.30 Australia S&P/ASX 200 down 1.6% to 6,469.41 Kospi down 3.0% to 2,220.94 STOXX Europe 600 down 0.2% to 389.70 German 10Y yield little changed at 2.08% Euro little changed at $0.9683 Brent Futures down 0.7% to $85.59/bbl Brent Futures down 0.7% to $85.59/bbl Gold spot up 0.1% to $1,645.98 U.S. Dollar Index little changed at 113.22 Top Overnight News from Bloomberg Chancellor of the Exchequer Kwasi Kwarteng must do more to reassure the markets about his plans for the economy after a selloff sent the pound crashing to an all-time low against the dollar, said Gerard Lyons, an external adviser to Prime Minister Liz Truss The UK’s foreign currency holdings are a fraction of the huge stockpiles built up by some of its peers, making unilateral intervention in the market to prop up the plunging pound a tall order for UK policymakers. The UK had $108 billion in foreign currency reserves at the end of August, according to data from the IMF Hedge funds ramped up bullish bets on the pound just days before the UK government’s unexpectedly large tax cuts sent the currency tumbling The ECB’s newest policy maker, Boris Vujcic, says “it’s clear that this is the right way to go,” backing this month’s 75-basis point interest-rate hike ECB Vice President Luis de Guindos said the biggest problem facing the continent’s economy is record inflation, which is becoming more broad-based, threatening investment and consumer spending ECB Governing Council member Yannis Stournaras says the central bank must maintain the main principles of gradualism and flexibility, since the problem it faces is different from the one that the US Fed faces China made it more expensive to bet against the yuan in the derivatives market, ramping up support for the currency as it slides toward the weakest level since the 2008 financial crisis A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks traded mostly negative in a resumption of last week's global stock rout amid the continued surge in the dollar and higher yields, while there was also FX volatility which saw a flash crash in GBP/USD to a record low. ASX 200 was dragged lower amid losses in the commodity-related sectors and with sentiment dampened by the collapse of potential M&A deals involving Ramsay Health-KKR and Link Administration-Dye & Durham. Nikkei 225 underperformed with Mazda Motors among the worst hit as it considers exiting Russian operations. Hang Seng and Shanghai Comp retraced most of their initial losses with Hong Kong underpinned following the scrapping of hotel quarantine policy and with casinos boosted as Macau is to resume tour groups from China, while the property industry benefits after China Construction Bank formed a CNY 30bln housing rental fund and some Twitter sources also circulated that some China state banks were reportedly ordered to buy stocks to contain selling. Top Asian News PBoC injected CNY 42bln via 7-day reverse repos with the rate kept at 2.00% and CNY 93bln via 14-day reverse repos with the rate kept at 2.15% for a net CNY 133bln injection. There were rumours circulating on social media of a coup against Chinese President Xi, although experts and journalists in Beijing dismissed the rumours and said there was no evidence to support them, according to The Print. Philippines Stock Exchange announced a trading suspension for Monday amid a typhoon in the capital, according to Reuters. European bourses are softer after a mixed cash open and despite a brief foray higher, Euro Stoxx 50 -0.5%, as sentiment remains subdued amid recession/inflation concerns. The breakdown features modest outperformance in the FTSE MIB as Italian election results are in-line with expectations. Stateside, futures are lower across the board in-fitting with peers going into a week of Fed speak and inflation data. Top European News UK PM Truss said she is determined to make the special relationship with the US even more special and said she agreed with US President Biden that it is vital to protect the Northern Ireland Good Friday Agreement, while she wants to find a way forward with a negotiated solution with the EU, according to Reuters and a CNN interview. UK PM Truss is to review visa schemes in an attempt to ease UK labour shortages, according to FT. UK Chancellor Kwarteng hinted that more tax cuts are on the way and claimed his tax cuts “favour people right across the income scale” amid accusations they mainly help the rich, according to Evening Standard. UK Chancellor Kwarteng said he is focused on growing the economy and the longer term when asked about the market reaction to his statement on Friday. Kwarteng added that he shares ideas with BoE Governor Bailey but added that Bailey is completely independent and Kwarteng is confident the BoE is dealing with inflation, according to Reuters. UK opposition Labour Party leader Starmer said they would reintroduce the top rate of income tax at 45% which the government announced to scrap last week, while he added that they will support the government plan to lower the basic rate of income tax to 19%, according to Reuters. Italy's right-wing bloc is seen winning the national election with 43.3% and centre-left bloc is seen winning 25.4%, according to the first projection by LA7 TV based on the actual vote count.. Click here for newsquawk snap analysis. Italy's Meloni said Italians gave clear backing to a centre-right government led by the Brothers of Italy and said the situation is difficult and needs contribution from everyone. It was separately reported that Italy's Democratic Party conceded in the election and said it will be the main opposition force, while Italy's Meloni claimed leadership of the next Italian government, according to Reuters and AFP. FX DXY climbed to a fresh YTD high of 114.58 before paring modestly, but remaining firmer, as GBP in particular lifts off worst levels. Cable succumbed to a flash crash overnight, with GBP/USD hitting an all-time-low around 1.0350 as participants confidence in the economy slips. EUR suffers amid the mentioned USD move but derives relative benefit from GBP, while ECB speakers thus far have added little. Antipodeans and CAD weighed on by broader risk and commodity pressure. Japanese Finance Minister Suzuki said the government and BoJ share views on concerns about a weak JPY, while he added that FX intervention had a certain effect and there is no change to the stance that they will respond to market moves as needed, according to Reuters. PBoC set USD/CNY mid-point at 7.0298 vs exp. 7.0019 (prev. 6.9920) PBoC imposed a 20% risk reserve requirement for FX forward sales from September 28th to rein in yuan weakness. Fixed Income Gilts have retained some composure after slumping over 200ticks at the commencement of trade and have settled around halfway between intraday extremes. EGBs downbeat in sympathy while BTPs marginally lag core-EGB peers as Italian as-expected election results are digested with BTP-Bund only modestly wider as such. Stateside, USTs are pressured in-fitting with peers and also conscious of the week's supply docket getting underway via a 43bln 2yr. Central Banks Fed’s Bostic (2024 voter) said inflation is too high and that they need to do all they can to bring it down and said demand is beginning to shrink which will ultimately pay dividends in inflation levels. Bostic also stated that there are scenarios where they can avoid deep pain but there will likely be some job losses, according to Reuters. BoJ's Kuroda says the BoJ will maintain accommodative monetary conditions to support companies, hopes to support a positive economic cycle, long-term inflation expectations have begun to heighten, via Reuters. Intervention from the MoF is an "appropriate" move, does not think gov't intervention and BoJ policy are contradictory. Amamiya says the domestic economy is picking up, must carefully watch how FX moves affect the economy and prices. BoJ Governor Kuroda says when he stated that BoJ forward guidance will not change for 2-3yrs, did not refer to guidance on keeping short and long-term rates at present of lower levels via Reuters. ECB's de Guindos says Q3 and Q4 point towards growth rates being close to zero within the EZ, the scenario is market by high uncertainty, lower growth and higher inflation. ECB's Panetta says ECB is assessing the potential of distributed ledger technology (DLT) and "the extent to which it could improve our services.". Capital Economics calls for the BoE to "get on the front foot with a big rate hike". Allianz's El-Erian says, on GBP, the fall is about extra tax cuts and Chancellor Kwarteng could recalibrate this. Alternative, would be for the BoE to hike at an emergency meeting. Adding, he would hike by 100bp. BoE publishes key elements of the 2022 annual cyclical scenario stress test; includes a scenario where the Bank Rate is assumed to rise rapidly to a peak of 6% in early 2023 before gradually reduced to sub-3.5%. Commodities WTI and Brent November futures remain subdued in early European trade following last week’s recession-induced losses. Spot gold trades in tandem with the Buck and sees resistance at around USD 1,650/oz after falling to USD 1,627/oz as a casualty of the Sterling flash crash overnight. LME metals are softer across the board with 3M copper futures having a hard time reclaiming USD +7,500/t status with upside capped by the Buck. Iraq began trial operations at the Karabala oil refinery which has a production capacity of 140k bpd, according to a statement from the Oil Ministry. German Chancellor Scholz signed a strategic agreement with UAE’s President on accelerating energy security and industrial growth, while UAE’s ADNOC signed an agreement with Germany’s RWE which includes ADNOC exporting its first LNG cargo to RWE and will conduct trial shipments of low-carbon ammonia to Germany. Furthermore, Chancellor Scholz said while visiting Doha that he talked with the Emir about LNG deliveries and that they want to achieve further progress, according to Reuters. Germany is preparing a national electricity price cap to be implemented this fall in the scenario the EU falls to agree on a similar move for the entirety of the bloc, via WSJ citing officials. Vitol's CEO said at the Asia Pacific Petroleum Conference that Russian gas supply cuts put enormous strain on supply-demand in Europe and that high gas prices are to impact 60%-80% of demand, while Ecopetrol's CEO said they are increasing crude exports to Europe this year to replace Russian supplies and are drilling 600 oil wells this year. Anglo American (AAL LN) tightens copper production guidance for Chile to 560k-580k tonnes of copper (prev. 560k-600k tonnes) due to lower throughput at Los Bronces caused by a combination of water restrictions and a change in ore characteristics, via Reuters. US Event Calendar 08:30: Aug. Chicago Fed Nat Activity Index, est. 0.23, prior 0.27 10:30: Sept. Dallas Fed Manf. Activity, est. -10.0, prior -12.9 Central Banks 10:00: Boston Fed’s Susan Collins Speaks to Boston Chamber of... 12:00: Fed’s Bostic Discusses Income Inequality 12:30: Fed’s Logan Speaks at Banking Conference 16:00: Fed’s Mester Discusses Economic Outlook DB's Jim Reid concludes the overnight wrap I wonder whether any research report has ever been written whilst watching synchronised swimming? Well if not, then you’re reading the first ever as I’m getting a head start on the early morning news by starting this on Sunday evening watching my daughter Maisie do her second session after getting into the local club. Watching this sport is going to take some getting used to after years of watching football, cricket, golf, F1, athletics, rugby... actually.... virtually every sport bar synchronised swimming. I think everyone felt they were swimming in a tsunami of newsflow last week after one of the most incredible macro weeks in recent memory in terms of breadth of events. Yes there have been more extreme weeks in crises but last week had a bit more variety and was outside of a crisis period. If over 500bps of global rate hikes wasn’t enough, you also had 2yr US yields moving higher for the 12th successive day on Friday (the longest steak since data begins in 1976), the BoJ intervening in FX markets for the first time since 1998, and what can only be termed as one of the darker days for sterling assets on record on Friday after a mammoth tax giveaway in what was a mini-budget in name and not by nature. Henry and I put a note out on Friday night (link here) showing that it was the third worst day for Sterling (-3.57%) since Black Wednesday in 1992, with the worst two since being the day after the Brexit vote (-8.1%) and after the initial covid shock in 2020 (-3.71%) when there was a global flight to dollars. We also show a graph of daily Sterling moves back to 1862 and on that it was the 41st worst day in history spanning 47,000 trading days. Obviously in the long era of fixed FX rates there were the occasional big devaluations which were much bigger than Friday. This morning is Asia it fell around -4.5% at one point (1.0392) which was a record low against the Dollar. It's around -2.78% as I type. This follows a weekend interview where Chancellor Kwarteng suggested that more tax cuts were to come so that certainly was a red rag to markets. Will we hear from the upper echelons of the BoE today? Watch out for any comments, especially at the market open. DB's George Saravelos suggested on Friday that the Bank of England need to do an inter meeting hike to restore policy credibility. There’s also a graph in our note mentioned above showing that Friday was the worst day for 5yr gilts (+50.3bps) since a +200bps hike in 1985 when sterling was also slumping. So maybe omens here. I suppose the only slight mystery is the timing of the sell-off as the mini-budget in magnitude was broadly in-line with the recent elevated fiscal expectations that had been building. However perhaps it was the unabashed revival of trickle-down economics that had markets a little aghast. It goes against the current economic orthodoxy and the overall zeitgeist of our immediate times. As such there is likely to be concerns of a credibility issue. We are publishing our long-term study today with the title “How we got here, and where we’re going?”. In it we try to put the current macro woes into historical context in an attempt to work out where we’re going. There are quite a few people who have proof-read it on my team and they were all thoroughly depressed at the end. I didn't feel that way writing it but maybe it's a case of starting point perceptions. Anyway, look out for it around the European lunchtime. Overnight in Italy, the right-wing alliance led by Giorgia Meloni's Brothers of Italy party was on course to become the nation’s first woman prime minister after exit polls gave it a clear majority. With the full results due later today, she is predicted to win up to 26% of the vote ahead of her closest rival Enrico Letta from the centre left. The right wing alliance is slated to be on course for around 43% of the vote, enough for a majority if correct. As I type, the euro is extending its losses against the dollar for the fifth day, its longest streak since April 28, falling as much as -0.5% to 0.9638, albeit being overshadowed by Sterling. For this week we have an array of consumer-driven economic data in the US and some important European inflation prints. We will also get a number of consumer sentiment indicators across the key economies and PMIs from Asia. Away from the data, there are more than 30 central banker appearances across the Fed and the ECB to keep markets busy. Tomorrow also sees referendums in the Russia-annexed Ukrainian territories as the conflict goes into its eight month. Going through the data in more details now. Starting with the US, the PCE and personal income and spending data will be front and centre for markets next week as they gauge the extent of inflationary pressures and the strength of the consumer. The Fed’s preferred inflation gauge, the PCE, due Friday, will be watched for signs of price pressures we saw in last week's CPI report. Our US economists expect core PCE to edge higher by +0.5% MoM (vs +0.1% in July) which won’t allow the Fed to take the foot off the tightening pedal. For the other two data points, our team forecasts a +0.1% MoM increase for both income and consumption. Final US Q2 GDP will also be released on Thursday and although DB expect no change to the -0.6% second reading, watch out for the annual benchmark revisions back to Q1 2017. History could be re-written that could have some implications for how we all think about the economy. In other US data, we will also get the consumer confidence index on Tuesday, along with durable goods orders, and inventories data on Wednesday, with the Chicago PMI on Friday. Over in Europe, all eyes will be on September's inflation data, including the Euro Area flash CPI release on Friday. Our economists are expecting the measure to hit a record +9.5%, up from the previous record of +9.1% in August. Other data in the region will include consumer and economic sentiment from Germany, France, Italy and the Eurozone throughout the week. Meanwhile, EU energy ministers will meet again on Friday regarding the emergency intervention amid elevated energy prices. Finally, next week's earnings line up will feature a number of retail bellwethers on Thursday. Among them will be Nike, H&M and Next. Micron will report that day as well. See our usual day by day guide to the week at the end which contains many of the key Fed and ECB speakers including Powell and Lagarde. Stock markets across Asia are mostly lower this morning. The Kospi (-2.40%), Nikkei (-2.30%) and the S&P/ASX 200 (-1.40%) are leading the declines. Meanwhile, the Hang Seng (+0.11%) is swinging between gains and losses after rising by +2.45% initially with Chinese shares mixed as the Shanghai Composite (-0.10%) is trading lower while the CSI (+0.46%) is up as we go to press. Stock futures in DMs are pointing to further losses with contracts on the S&P 500 (-0.49%), NASDAQ 100 (-0.46%) and DAX (-0.33%) all moving lower. Early morning data showed that Japan’s manufacturing sector continued to expand albeit at a slower pace as the latest au Jibun Bank manufacturing PMI slipped to a 20-month low of 51.0 in September from 51.5 in August, pulled lower by high energy and raw material prices that was exacerbated by a weak yen. At the same time, the au Jibun Bank services PMI returned to expansion, recording a level of 51.9 in September from August's 49.5 final reading. Moving on to China, in order to stabilise expectations in the FX market, the People’s Bank of China (PBOC) today raised the risk reserve requirement on foreign exchange forward sales to 20% from 0% beginning September 28 as the yuan faces increasing depreciation pressure, in line with most major currencies amid broad dollar strength. Looking back now on a week that will not be forgotten anytime soon. While there were historic central bank hikes all week, the biggest news came from the fiscal authorities, following the UK’s budget Friday, which had the largest tax cut package since the 1970s. Gilt yields had their largest one-day increase in decades with 2yrs +44.7bps, 5yrs +50.3bps, and 10yrs +33.3bps. As we mentioned at the top, 5yrs yields saw their largest move since 1985 after a +200bps hike aimed at helping a plunging currency. The pound fell -3.57% against the US dollar to within a percentage point of the weakest in the post-Bretton Woods 51yr free float era. It was already a busy macro week before the blockbuster budget, where we got more than 500bps of global central bank hikes and a currency intervention from Japan. In terms of the biggest players, the Fed delivered its third consecutive 75bp hike while the BoE delivered its second 50bp hike in a row, with both banks guiding toward yet more tightening, while the BoJ remained the outlier by keeping its accommodative policy in place, which isn’t going to help the yen turnaround even with intervention. When all was said and done, sovereign bonds and equities sold off in size, while yield curves flattened. 2yr Treasuries (+33.4bps, +7.9bps Friday), 2yr Bunds (+38.5bps, +7.2bps Friday), 2yr Gilts (+82.1bps, +44.7bps Friday) reached their highest levels since 2007, 2008, and 2008, respectively, as markets priced in more tightening to overcome inflationary pressures (and in the case of the UK, fiscal expansion). 10yr Treasuries (+23.5bps, -2.9bps Friday) ended the week a touch lower on the day but hit their highest levels since 2011 during the week, while 10yr Bunds (+26.8bps, +5.9bps Friday), and 10yr Gilts (+69.1bps, +33.3bps Friday) hit their highest levels since 2013 and 2011, respectively. The mixture unsurprisingly proved unpalatable to risk assets, driving the STOXX 600 and S&P 500 back to their lows for the year. The STOXX 600 retreated -4.37% on the week and -2.34% on Friday, the worst weekly and daily return since mid-June. The S&P 500 fell -4.65% (-1.75% Friday), returning to bear market territory. The FTSE managed to stay above its YTD lows, but still fell -3.01% on the week, its worst weekly return since mid-June as well, and retreated -1.97% on Friday, the worst daily return since early July. Tyler Durden Mon, 09/26/2022 - 08:08.....»»

Category: blogSource: zerohedgeSep 26th, 2022

“Global Gloom": World Markets Plunge To Start The Week As Global Currency Crash Hits Max Pain And Beyond

“Global Gloom": World Markets Plunge To Start The Week As Global Currency Crash Hits Max Pain And Beyond The rout which hammered stocks on Friday, nearly pushing them to close at a new 2022 low, resumed overnight when the global FX crisis returned with a bang, and a flash crash in the British pound which as noted late last night, plummeted 500pips in thin trading, to fresh record lows following Friday's shocking mini-budget announcement which confirmed the UK has no idea what it is doing and will cut rates and issue more debt just as the BOE is desperately trying to tighten financial conditions. The plunge in cable was however just one symptom of a bigger malaise, namely the relentless surge in the dollar which overnight hit fresh record highs as the BBDXY rose as high as 1,355 before briefly fading the surge... ... as every dollar-denominated debt issuer in the world is suffering crippling pain and begging Powell to do something to ease the unprecedented shock of the strongest dollar in history just as the world slumps into a global depression. Alas, so far there is nothing but silence from the Fed - which will likely have to make some announcement on central bank currency swaps at some point before the open today to avoid an even more epic FX rout - and as traders await something to break big time across global markets... This is the week of the barbell trade: deep OTM calls and puts as things either break or CBs panic. — zerohedge (@zerohedge) September 26, 2022 ... this morning futures have tumbled another 0.7%, as eminis drop to 3,683 while Nasdaq futures are down 0.8% to 11,290 on fears that Federal Reserve rate hikes to combat persistently elevated inflation will crush the economy into a full-blown recession, or depression, and the VIX soared above 32. It wasn't just FX and stocks crashing: British bonds also cratered as yields surged to the highest in more than a decade, sparking talk of emergency action by the Bank of England. For one example of the total chaos look no further than 5Y UK Gilts which have exploded 51bps higher and last traded around 4.58% as the market now prices in Similar implosions were observed in US TSYs, where the 10Y traded just shy of Friday's mini blowout, and was last seen at 3.7828% as bond traders are hit by VaR shocks at the same time in every possible market. Turning back to stocks, the rout wasn't isolated to just one market and an index of global stocks traded to the lowest since 2020. European equities extended declines after sliding into a bear market on Friday, with mining and energy stocks underperforming as metals and oil fell. “We’re in a period of global gloom, with pessimism blanketing different countries for different reasons,” said Ed Yardeni, president of his eponymous research firm, who warned of growing storm clouds for the US economy. “The latest data jibe with our growth recession scenario, but the risks of a full-blown recession are obviously increasing,” he wrote in a note Monday. In premarket trading, major US tech and internet stocks including Apple, Amazon and Microsoft tumbled. Here are some other notable premarket movers: Farfetch (FTCH US) shares fall as much as 4.43% in US premarket trading, after Citi begins coverage of the luxury online retailer with a sell rating, with broker flagging “weak” underlying profitability. Shares of US-listed Macau casinos jump in premarket trading, after Macau government said tour groups from mainland China could resume as early as November. Wynn Resorts (WYNN US) jumps 5.4%; Las Vegas Sands (LVS US) +6.9%, Melco (MLCO US) +9.6% and MGM resorts (MGM US) +1.6% Cryptocurrency-exposed stocks edged higher in premarket trading on Monday as Bitcoin rose above $19,000. Marathon Digital (MARA US) +1.9%, Coinbase (COIN US) +0.4% Keep an eye on Diana Shipping (DSX US) and Safe Bulkers (SB US) as Jefferies downgraded them to hold from buy and lowered dry bulk estimates to reflect the decline in dry bulk charter rates. European shares extended their fall to Dec. 2020 lows; sliding 1% and extending losses as investors priced a major economic shock and recession. The Stoxx 600 Index was down 1% by 10:50am in London, touching its lowest since December 2020, with real estate and banks among the worst performing sectors, while technology shares outperformed. Italy’s FTSE MIB bucked broader European declines to trade little changed, after Giorgia Meloni won a clear majority in Sunday’s election, in line with expectations. Banks and real estate stocks were the worst-performing sectors in Europe on Monday, with declines led by UK stocks as the pound and UK bonds slump. The Stoxx 600 Banks Index and the Stoxx 600 Real Estate are both down at least 2.5% while the benchmark gauge is 1.1% lower. The bank index decline is led by UK names including Virgin Money (-10%), Lloyds (-4.6%) and NatWest (-4.5%). Virgin Money was today resumed with a hold rating at Berenberg; broker said that the lender is expected to see revenue declines and a sector- lagging return on tangible equity which will affect ability to re-rate. Among real estate stocks, the UK’s Safestore Holdings (-4.2%), Assura (-3.9%) and Derwent London (-3.8%) are among the worst performers; non-index member housebuilders, including Persimmon, Bellway and Taylor Wimpey, are also plunging as the pound’s slump prompts talk of emergency action by the Bank of England. Here are the most notable movers today: The Stoxx 600 Tech Index rises as much as 2.4%, set for its biggest one-day outperformance against the broader Stoxx 600 since early-August, with semiconductor stocks leading gains. Among chip stocks, ASML rose as much as +3.7% after Santander upgraded the stock to neutral from underperform Italy’s FTSE MIB index gains, bucking weaker markets in Europe, after Giorgia Meloni won a clear majority in Sunday’s election. While the outcome was in line with expectations, the fact that the coalition didn’t obtain a super majority needed to change the constitution reassures investors. Telecom Italia rose as much +7.4%, FinecoBank +5.1%, Moncler +4.4% Unilever shares rise as much as 3.7% after it announced that CEO Alan Jope will retire from the company at the end of 2023, in a move that Jefferies analyst Martin Deboo (buy) sees as a positive development. RPS Group shares rise as much as 13% after Tetra Tech’s agreed deal to buy the company at 222p/share in cash, representing a 7.8% premium to an offer WSP made in August. Liberum does not rule out a counterbid. Belimo shares rise as much as 8.5% since the market isn’t fully pricing in its growth outlook, Berenberg says in a note, moving to buy and establishing a Street-high CHF440 target. The stock gains as much as 8.1%, the most since March 2021. Zalando shares rise as much as 4.8% after Citi analyst says they like the long-term investment story, short-term earnings risks are still high. UK Domestics: the most remarkable reaction to Friday’s not-so-mini budget, however, might be in lenders’ shares. The decline in banking stocks reflects investors’ pessimistic view on Britain’s economy. HSBC fell as much as 2.9%; Lloyds -4.3%, NatWest -4.7% and Barclays -3.0%. Virgin Money UK shares drop as much as 10% after Berenberg resumed a hold rating in note, stating that in many ways the UK small banks are “more different than they are alike.” Utilities are the day’s worst-performing European sector. Citi analyst Piotr Dzieciolowski says the EU’s funding for its policy response has so far been insufficient and also expects uncertainty to persist for UK names. United Utilities fell as much as -3.4%, Drax -3.8% Geopolitical risks from the war in Ukraine to escalating tensions over Taiwan and unrest in Iran also weighed on sentiment. Meanwhile, the OECD cut almost all growth forecasts for the Group of 20 next year while anticipating further interest-rate hikes, and a gauge of German business confidence deteriorated. Earlier in the session, a rout in Asian stocks extended into Monday as rising concerns about a global recession and weak demand hit the region’s exporters and materials producers. The MSCI Asia Pacific Index declined as much as 2.3% to the lowest since April 2020, dragged lower by TSMC, BHP and Toyota Motor. All but one sector traded lower with materials leading the slump.  South Korean stocks fell the most in the region, with the benchmark tumbling 3% to more than a two-year low. The Korean market’s heavy tech exposure has proven costly amid rising rates and a stronger dollar, with fears that a looming recession may wreak havoc on global demand. Gauges in Hong Kong and China reversed earlier gains as the region’s selloff intensified.   Korea Assets Are Asia’s Biggest Losers on Global Recession Angst “Investor sentiment is again at the stage of extreme fear,” said Lee Kyoung-Min, an analyst at Daishin Investment. “It is becoming solid and clear that Kospi and other global stock markets are on a mid-to-long term downward trend.” Asian stock benchmarks are being buffeted by global headwinds as well as risks of their own. The Federal Reserve’s relentless rate hike campaign is pushing Asian currencies lower and raising the risk of capital outflows, while China’s adherence to Covid Zero is hurting growth in the region’s economic giant.  If Monday’s losses are extended through the week, the MSCI Asia Pacific Index will see its longest run of declines since 2015. Japan stocks declined more than 2% as the nation resumed trading after a holiday on Friday. The Philippine stock market was closed Monday as Super Typhoon Noru barreled into the main Luzon island.  Among the key issues investors are watching this week are speeches by central bank officials in US and Europe, including Fed Chair Jerome Powell on Tuesday. Japanese equities tumbled as the market reopened following a three-day weekend, tracking US peers lower after the Fed’s hawkish comments last week deepened fears of a global downturn. The Topix fell 2.7% to close at 1,864.28, while the Nikkei declined 2.7% to 26,431.55. Toyota Motor contributed the most to the Topix decline, decreasing 3.2% after its monthly production update lagged expectations. Out of 2,169 stocks in the index, 145 rose and 1,985 fell, while 39 were unchanged. “There is a possibility that inflation will not subside and interest rates will rise further, which the markets will not like,” said Shoji Hirakawa, a chief global strategist at Tokai Tokyo Research. In Australia, the S&P/ASX 200 index fell 1.6% to close at 6,469.40, as energy and mining shares plummeted. An energy gauge including oil and coal linked securities declined by the most since March 2020.  The New Zealand market was closed for a holiday In India, key stocks gauges plunged to their lowest closing levels in almost two months as the global equity rout continues. The S&P BSE Sensex dropped 1.6% to 57,145.22 in Mumbai to its lowest since July 28. The NSE Nifty 50 Index fell 1.8%, its biggest single-day plunge since Sept. 16. Both the indexes, down in four of the past five weeks, have lost almost 6% since this month’s peak. Volatility in domestic equities is likely to remain elevated this week, pending monthly derivatives expiry on Thursday. Of 30 shares in the Sensex index, 24 fell and 6 advanced. All but one of the 19 sector sub-indexes compiled by BSE Ltd. declined, led by utilities and power companies.  The Indian rupee weakened to a new record against the dollar amid surging US Treasury yields. The Reserve Bank of India’s rate-setting panel will announce monetary policy later this week. As noted above, while stocks are ugly, rates are a horrorshow as Treasuries extended their worst bond slide in decades as a dollar gauge rose to yet another record. Treasuries extended losses in a bear flattening move with yields cheaper by up to 10bp across the belly of the curve. US 10-year yields around 3.78%, cheaper by 6bp on the day with 5s30s spread flatter by 5bp, dropping as low as -45.4bp in European session; UK yields cheaper by 60bp to 25bp from front- end out to long-end of the curve. The Move comes as market participants brace for accelerated policy tightening from global central banks and headlines such as this: *TRADERS PRICE IN UP TO 200BPS OF BOE RATE HIKES BY NOVEMBER Yields on 2-year gilts are 60bp cheaper heading into early US session, while the pound recovers slightly after reaching a fresh all-time low. US session focus on 2-year auction, while a barrage of Fed speakers are expected for the week. Peripheral spreads widen to Germany with 10y BTP/Bund widening 7bps to 238bps. FX, of course, is a disaster, with the Bloomberg Dollar Spot Index rising a fifth consecutive day as the greenback advanced versus most of its Group-of-10 peers. The pound plunged almost 5% to $1.0350 in Asian trading, the lowest recorded in Bloomberg data going back to 1971, while gilts crashed after the UK government vowed to press ahead with more tax cuts, stoking fears that new fiscal policies will send inflation and debt soaring, triggering emergency rate hikes. The options market signals no respite even as the pound rebounded from a record low hit during the Asia session. The yield on two- year bonds surged more than 55 basis points to 4.51%, while the 10-year yield rose 37 basis points to 4.19%. Money markets price in more than 150 basis points of rate increases by the BoE’s next policy meeting in November The euro steadied after earlier dropping to $0.9554; European bond yields rose; Italian bonds underperformed German peers. Giorgia Meloni won a clear majority in Sunday’s Italian election, setting herself up to become the country’s first female prime minister at the head of the most right-wing government since World War II. Germany’s IFO business expectations slid to 75.2 in September from 80.3 in August. That’s the lowest since April 2020. Analysts had predicted a drop to 79. An index of current conditions also fell. The Australian and New Zealand dollars pared some losses after earlier touching fresh 2-year lows. Aussie bond yields rose by up to 13bps, led by the front end The yen weakened amid a broadly stronger dollar. Bank of Japan Governor Haruhiko Kuroda said the government’s intervention in the foreign exchange market last week was appropriate given the recent volatility in the yen The currency’s rally is “untenable” for risk assets, according to a note by Morgan Stanley strategists led by Michael Wilson, while Sian Fenner, senior Asia economist for Oxford Economics, said that “It’s a king US dollar...“It’s adding to inflationary pressures and more central banks raising rates more than we have historically seen.” In commodities, WTI slides almost 1% to trade near $78/bbl. Spot gold mostly unchanged near $1,643/oz. Bitcoin climbs above $19,000. Trading this week will be punctuated by a number of economic reports including US initial jobless claims and gross-domestic-product data, along with PMI figures from China. Choppiness in price moves is likely with a steady stream of Federal Reserve officials speaking through the week. Looking at today's calendar, we get the September Dallas Fed manufacturing activity index, and the August Chicago Fed national activity index. Central bank speakers include the Fed's Bostic, Collins, Logan and Mester; ECB's Lagarde also speaks as does Nagel, Guindos, Centeno and Panetta speak, BoE's Tenreyro speaks. Market Snapshot S&P 500 futures little changed at 3,706.25 MXAP down 2.0% to 142.24 MXAPJ down 1.4% to 463.08 Nikkei down 2.7% to 26,431.55 Topix down 2.7% to 1,864.28 Hang Seng Index down 0.4% to 17,855.14 Shanghai Composite down 1.2% to 3,051.23 Sensex down 1.2% to 57,378.30 Australia S&P/ASX 200 down 1.6% to 6,469.41 Kospi down 3.0% to 2,220.94 STOXX Europe 600 down 0.2% to 389.70 German 10Y yield little changed at 2.08% Euro little changed at $0.9683 Brent Futures down 0.7% to $85.59/bbl Brent Futures down 0.7% to $85.59/bbl Gold spot up 0.1% to $1,645.98 U.S. Dollar Index little changed at 113.22 Top Overnight News from Bloomberg Chancellor of the Exchequer Kwasi Kwarteng must do more to reassure the markets about his plans for the economy after a selloff sent the pound crashing to an all-time low against the dollar, said Gerard Lyons, an external adviser to Prime Minister Liz Truss The UK’s foreign currency holdings are a fraction of the huge stockpiles built up by some of its peers, making unilateral intervention in the market to prop up the plunging pound a tall order for UK policymakers. The UK had $108 billion in foreign currency reserves at the end of August, according to data from the IMF Hedge funds ramped up bullish bets on the pound just days before the UK government’s unexpectedly large tax cuts sent the currency tumbling The ECB’s newest policy maker, Boris Vujcic, says “it’s clear that this is the right way to go,” backing this month’s 75-basis point interest-rate hike ECB Vice President Luis de Guindos said the biggest problem facing the continent’s economy is record inflation, which is becoming more broad-based, threatening investment and consumer spending ECB Governing Council member Yannis Stournaras says the central bank must maintain the main principles of gradualism and flexibility, since the problem it faces is different from the one that the US Fed faces China made it more expensive to bet against the yuan in the derivatives market, ramping up support for the currency as it slides toward the weakest level since the 2008 financial crisis A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks traded mostly negative in a resumption of last week's global stock rout amid the continued surge in the dollar and higher yields, while there was also FX volatility which saw a flash crash in GBP/USD to a record low. ASX 200 was dragged lower amid losses in the commodity-related sectors and with sentiment dampened by the collapse of potential M&A deals involving Ramsay Health-KKR and Link Administration-Dye & Durham. Nikkei 225 underperformed with Mazda Motors among the worst hit as it considers exiting Russian operations. Hang Seng and Shanghai Comp retraced most of their initial losses with Hong Kong underpinned following the scrapping of hotel quarantine policy and with casinos boosted as Macau is to resume tour groups from China, while the property industry benefits after China Construction Bank formed a CNY 30bln housing rental fund and some Twitter sources also circulated that some China state banks were reportedly ordered to buy stocks to contain selling. Top Asian News PBoC injected CNY 42bln via 7-day reverse repos with the rate kept at 2.00% and CNY 93bln via 14-day reverse repos with the rate kept at 2.15% for a net CNY 133bln injection. There were rumours circulating on social media of a coup against Chinese President Xi, although experts and journalists in Beijing dismissed the rumours and said there was no evidence to support them, according to The Print. Philippines Stock Exchange announced a trading suspension for Monday amid a typhoon in the capital, according to Reuters. European bourses are softer after a mixed cash open and despite a brief foray higher, Euro Stoxx 50 -0.5%, as sentiment remains subdued amid recession/inflation concerns. The breakdown features modest outperformance in the FTSE MIB as Italian election results are in-line with expectations. Stateside, futures are lower across the board in-fitting with peers going into a week of Fed speak and inflation data. Top European News UK PM Truss said she is determined to make the special relationship with the US even more special and said she agreed with US President Biden that it is vital to protect the Northern Ireland Good Friday Agreement, while she wants to find a way forward with a negotiated solution with the EU, according to Reuters and a CNN interview. UK PM Truss is to review visa schemes in an attempt to ease UK labour shortages, according to FT. UK Chancellor Kwarteng hinted that more tax cuts are on the way and claimed his tax cuts “favour people right across the income scale” amid accusations they mainly help the rich, according to Evening Standard. UK Chancellor Kwarteng said he is focused on growing the economy and the longer term when asked about the market reaction to his statement on Friday. Kwarteng added that he shares ideas with BoE Governor Bailey but added that Bailey is completely independent and Kwarteng is confident the BoE is dealing with inflation, according to Reuters. UK opposition Labour Party leader Starmer said they would reintroduce the top rate of income tax at 45% which the government announced to scrap last week, while he added that they will support the government plan to lower the basic rate of income tax to 19%, according to Reuters. Italy's right-wing bloc is seen winning the national election with 43.3% and centre-left bloc is seen winning 25.4%, according to the first projection by LA7 TV based on the actual vote count.. Click here for newsquawk snap analysis. Italy's Meloni said Italians gave clear backing to a centre-right government led by the Brothers of Italy and said the situation is difficult and needs contribution from everyone. It was separately reported that Italy's Democratic Party conceded in the election and said it will be the main opposition force, while Italy's Meloni claimed leadership of the next Italian government, according to Reuters and AFP. FX DXY climbed to a fresh YTD high of 114.58 before paring modestly, but remaining firmer, as GBP in particular lifts off worst levels. Cable succumbed to a flash crash overnight, with GBP/USD hitting an all-time-low around 1.0350 as participants confidence in the economy slips. EUR suffers amid the mentioned USD move but derives relative benefit from GBP, while ECB speakers thus far have added little. Antipodeans and CAD weighed on by broader risk and commodity pressure. Japanese Finance Minister Suzuki said the government and BoJ share views on concerns about a weak JPY, while he added that FX intervention had a certain effect and there is no change to the stance that they will respond to market moves as needed, according to Reuters. PBoC set USD/CNY mid-point at 7.0298 vs exp. 7.0019 (prev. 6.9920) PBoC imposed a 20% risk reserve requirement for FX forward sales from September 28th to rein in yuan weakness. Fixed Income Gilts have retained some composure after slumping over 200ticks at the commencement of trade and have settled around halfway between intraday extremes. EGBs downbeat in sympathy while BTPs marginally lag core-EGB peers as Italian as-expected election results are digested with BTP-Bund only modestly wider as such. Stateside, USTs are pressured in-fitting with peers and also conscious of the week's supply docket getting underway via a 43bln 2yr. Central Banks Fed’s Bostic (2024 voter) said inflation is too high and that they need to do all they can to bring it down and said demand is beginning to shrink which will ultimately pay dividends in inflation levels. Bostic also stated that there are scenarios where they can avoid deep pain but there will likely be some job losses, according to Reuters. BoJ's Kuroda says the BoJ will maintain accommodative monetary conditions to support companies, hopes to support a positive economic cycle, long-term inflation expectations have begun to heighten, via Reuters. Intervention from the MoF is an "appropriate" move, does not think gov't intervention and BoJ policy are contradictory. Amamiya says the domestic economy is picking up, must carefully watch how FX moves affect the economy and prices. BoJ Governor Kuroda says when he stated that BoJ forward guidance will not change for 2-3yrs, did not refer to guidance on keeping short and long-term rates at present of lower levels via Reuters. ECB's de Guindos says Q3 and Q4 point towards growth rates being close to zero within the EZ, the scenario is market by high uncertainty, lower growth and higher inflation. ECB's Panetta says ECB is assessing the potential of distributed ledger technology (DLT) and "the extent to which it could improve our services.". Capital Economics calls for the BoE to "get on the front foot with a big rate hike". Allianz's El-Erian says, on GBP, the fall is about extra tax cuts and Chancellor Kwarteng could recalibrate this. Alternative, would be for the BoE to hike at an emergency meeting. Adding, he would hike by 100bp. BoE publishes key elements of the 2022 annual cyclical scenario stress test; includes a scenario where the Bank Rate is assumed to rise rapidly to a peak of 6% in early 2023 before gradually reduced to sub-3.5%. Commodities WTI and Brent November futures remain subdued in early European trade following last week’s recession-induced losses. Spot gold trades in tandem with the Buck and sees resistance at around USD 1,650/oz after falling to USD 1,627/oz as a casualty of the Sterling flash crash overnight. LME metals are softer across the board with 3M copper futures having a hard time reclaiming USD +7,500/t status with upside capped by the Buck. Iraq began trial operations at the Karabala oil refinery which has a production capacity of 140k bpd, according to a statement from the Oil Ministry. German Chancellor Scholz signed a strategic agreement with UAE’s President on accelerating energy security and industrial growth, while UAE’s ADNOC signed an agreement with Germany’s RWE which includes ADNOC exporting its first LNG cargo to RWE and will conduct trial shipments of low-carbon ammonia to Germany. Furthermore, Chancellor Scholz said while visiting Doha that he talked with the Emir about LNG deliveries and that they want to achieve further progress, according to Reuters. Germany is preparing a national electricity price cap to be implemented this fall in the scenario the EU falls to agree on a similar move for the entirety of the bloc, via WSJ citing officials. Vitol's CEO said at the Asia Pacific Petroleum Conference that Russian gas supply cuts put enormous strain on supply-demand in Europe and that high gas prices are to impact 60%-80% of demand, while Ecopetrol's CEO said they are increasing crude exports to Europe this year to replace Russian supplies and are drilling 600 oil wells this year. Anglo American (AAL LN) tightens copper production guidance for Chile to 560k-580k tonnes of copper (prev. 560k-600k tonnes) due to lower throughput at Los Bronces caused by a combination of water restrictions and a change in ore characteristics, via Reuters. US Event Calendar 08:30: Aug. Chicago Fed Nat Activity Index, est. 0.23, prior 0.27 10:30: Sept. Dallas Fed Manf. Activity, est. -10.0, prior -12.9 Central Banks 10:00: Boston Fed’s Susan Collins Speaks to Boston Chamber of... 12:00: Fed’s Bostic Discusses Income Inequality 12:30: Fed’s Logan Speaks at Banking Conference 16:00: Fed’s Mester Discusses Economic Outlook DB's Jim Reid concludes the overnight wrap I wonder whether any research report has ever been written whilst watching synchronised swimming? Well if not, then you’re reading the first ever as I’m getting a head start on the early morning news by starting this on Sunday evening watching my daughter Maisie do her second session after getting into the local club. Watching this sport is going to take some getting used to after years of watching football, cricket, golf, F1, athletics, rugby... actually.... virtually every sport bar synchronised swimming. I think everyone felt they were swimming in a tsunami of newsflow last week after one of the most incredible macro weeks in recent memory in terms of breadth of events. Yes there have been more extreme weeks in crises but last week had a bit more variety and was outside of a crisis period. If over 500bps of global rate hikes wasn’t enough, you also had 2yr US yields moving higher for the 12th successive day on Friday (the longest steak since data begins in 1976), the BoJ intervening in FX markets for the first time since 1998, and what can only be termed as one of the darker days for sterling assets on record on Friday after a mammoth tax giveaway in what was a mini-budget in name and not by nature. Henry and I put a note out on Friday night (link here) showing that it was the third worst day for Sterling (-3.57%) since Black Wednesday in 1992, with the worst two since being the day after the Brexit vote (-8.1%) and after the initial covid shock in 2020 (-3.71%) when there was a global flight to dollars. We also show a graph of daily Sterling moves back to 1862 and on that it was the 41st worst day in history spanning 47,000 trading days. Obviously in the long era of fixed FX rates there were the occasional big devaluations which were much bigger than Friday. This morning is Asia it fell around -4.5% at one point (1.0392) which was a record low against the Dollar. It's around -2.78% as I type. This follows a weekend interview where Chancellor Kwarteng suggested that more tax cuts were to come so that certainly was a red rag to markets. Will we hear from the upper echelons of the BoE today? Watch out for any comments, especially at the market open. DB's George Saravelos suggested on Friday that the Bank of England need to do an inter meeting hike to restore policy credibility. There’s also a graph in our note mentioned above showing that Friday was the worst day for 5yr gilts (+50.3bps) since a +200bps hike in 1985 when sterling was also slumping. So maybe omens here. I suppose the only slight mystery is the timing of the sell-off as the mini-budget in magnitude was broadly in-line with the recent elevated fiscal expectations that had been building. However perhaps it was the unabashed revival of trickle-down economics that had markets a little aghast. It goes against the current economic orthodoxy and the overall zeitgeist of our immediate times. As such there is likely to be concerns of a credibility issue. We are publishing our long-term study today with the title “How we got here, and where we’re going?”. In it we try to put the current macro woes into historical context in an attempt to work out where we’re going. There are quite a few people who have proof-read it on my team and they were all thoroughly depressed at the end. I didn't feel that way writing it but maybe it's a case of starting point perceptions. Anyway, look out for it around the European lunchtime. Overnight in Italy, the right-wing alliance led by Giorgia Meloni's Brothers of Italy party was on course to become the nation’s first woman prime minister after exit polls gave it a clear majority. With the full results due later today, she is predicted to win up to 26% of the vote ahead of her closest rival Enrico Letta from the centre left. The right wing alliance is slated to be on course for around 43% of the vote, enough for a majority if correct. As I type, the euro is extending its losses against the dollar for the fifth day, its longest streak since April 28, falling as much as -0.5% to 0.9638, albeit being overshadowed by Sterling. For this week we have an array of consumer-driven economic data in the US and some important European inflation prints. We will also get a number of consumer sentiment indicators across the key economies and PMIs from Asia. Away from the data, there are more than 30 central banker appearances across the Fed and the ECB to keep markets busy. Tomorrow also sees referendums in the Russia-annexed Ukrainian territories as the conflict goes into its eight month. Going through the data in more details now. Starting with the US, the PCE and personal income and spending data will be front and centre for markets next week as they gauge the extent of inflationary pressures and the strength of the consumer. The Fed’s preferred inflation gauge, the PCE, due Friday, will be watched for signs of price pressures we saw in last week's CPI report. Our US economists expect core PCE to edge higher by +0.5% MoM (vs +0.1% in July) which won’t allow the Fed to take the foot off the tightening pedal. For the other two data points, our team forecasts a +0.1% MoM increase for both income and consumption. Final US Q2 GDP will also be released on Thursday and although DB expect no change to the -0.6% second reading, watch out for the annual benchmark revisions back to Q1 2017. History could be re-written that could have some implications for how we all think about the economy. In other US data, we will also get the consumer confidence index on Tuesday, along with durable goods orders, and inventories data on Wednesday, with the Chicago PMI on Friday. Over in Europe, all eyes will be on September's inflation data, including the Euro Area flash CPI release on Friday. Our economists are expecting the measure to hit a record +9.5%, up from the previous record of +9.1% in August. Other data in the region will include consumer and economic sentiment from Germany, France, Italy and the Eurozone throughout the week. Meanwhile, EU energy ministers will meet again on Friday regarding the emergency intervention amid elevated energy prices. Finally, next week's earnings line up will feature a number of retail bellwethers on Thursday. Among them will be Nike, H&M and Next. Micron will report that day as well. See our usual day by day guide to the week at the end which contains many of the key Fed and ECB speakers including Powell and Lagarde. Stock markets across Asia are mostly lower this morning. The Kospi (-2.40%), Nikkei (-2.30%) and the S&P/ASX 200 (-1.40%) are leading the declines. Meanwhile, the Hang Seng (+0.11%) is swinging between gains and losses after rising by +2.45% initially with Chinese shares mixed as the Shanghai Composite (-0.10%) is trading lower while the CSI (+0.46%) is up as we go to press. Stock futures in DMs are pointing to further losses with contracts on the S&P 500 (-0.49%), NASDAQ 100 (-0.46%) and DAX (-0.33%) all moving lower. Early morning data showed that Japan’s manufacturing sector continued to expand albeit at a slower pace as the latest au Jibun Bank manufacturing PMI slipped to a 20-month low of 51.0 in September from 51.5 in August, pulled lower by high energy and raw material prices that was exacerbated by a weak yen. At the same time, the au Jibun Bank services PMI returned to expansion, recording a level of 51.9 in September from August's 49.5 final reading. Moving on to China, in order to stabilise expectations in the FX market, the People’s Bank of China (PBOC) today raised the risk reserve requirement on foreign exchange forward sales to 20% from 0% beginning September 28 as the yuan faces increasing depreciation pressure, in line with most major currencies amid broad dollar strength. Looking back now on a week that will not be forgotten anytime soon. While there were historic central bank hikes all week, the biggest news came from the fiscal authorities, following the UK’s budget Friday, which had the largest tax cut package since the 1970s. Gilt yields had their largest one-day increase in decades with 2yrs +44.7bps, 5yrs +50.3bps, and 10yrs +33.3bps. As we mentioned at the top, 5yrs yields saw their largest move since 1985 after a +200bps hike aimed at helping a plunging currency. The pound fell -3.57% against the US dollar to within a percentage point of the weakest in the post-Bretton Woods 51yr free float era. It was already a busy macro week before the blockbuster budget, where we got more than 500bps of global central bank hikes and a currency intervention from Japan. In terms of the biggest players, the Fed delivered its third consecutive 75bp hike while the BoE delivered its second 50bp hike in a row, with both banks guiding toward yet more tightening, while the BoJ remained the outlier by keeping its accommodative policy in place, which isn’t going to help the yen turnaround even with intervention. When all was said and done, sovereign bonds and equities sold off in size, while yield curves flattened. 2yr Treasuries (+33.4bps, +7.9bps Friday), 2yr Bunds (+38.5bps, +7.2bps Friday), 2yr Gilts (+82.1bps, +44.7bps Friday) reached their highest levels since 2007, 2008, and 2008, respectively, as markets priced in more tightening to overcome inflationary pressures (and in the case of the UK, fiscal expansion). 10yr Treasuries (+23.5bps, -2.9bps Friday) ended the week a touch lower on the day but hit their highest levels since 2011 during the week, while 10yr Bunds (+26.8bps, +5.9bps Friday), and 10yr Gilts (+69.1bps, +33.3bps Friday) hit their highest levels since 2013 and 2011, respectively. The mixture unsurprisingly proved unpalatable to risk assets, driving the STOXX 600 and S&P 500 back to their lows for the year. The STOXX 600 retreated -4.37% on the week and -2.34% on Friday, the worst weekly and daily return since mid-June. The S&P 500 fell -4.65% (-1.75% Friday), returning to bear market territory. The FTSE managed to stay above its YTD lows, but still fell -3.01% on the week, its worst weekly return since mid-June as well, and retreated -1.97% on Friday, the worst daily return since early July. Tyler Durden Mon, 09/26/2022 - 08:08.....»»

Category: blogSource: zerohedgeSep 26th, 2022

Annuities: Types And Examples

Whether you know it or not, you’ve at least heard the word “annuity” thrown around. Unconvinced? You’ve probably encountered annuities in the following instances: Defined benefit pensions. Defined benefit pensions guarantee specific benefits upon retirement. Employers can administer pensions in the form of a lump sum or lifetime annuity. Due to the fact that these […] Whether you know it or not, you’ve at least heard the word “annuity” thrown around. Unconvinced? You’ve probably encountered annuities in the following instances: Defined benefit pensions. Defined benefit pensions guarantee specific benefits upon retirement. Employers can administer pensions in the form of a lump sum or lifetime annuity. Due to the fact that these are deposits to banks, the Federal Deposit Insurance Corporation (FDIC) supervises them instead of the Securities and Exchange Commission (SEC). Social security. Ultimately, Social Security is a government-backed annuity, much like an immediate annuity. Those over 65 will receive a guaranteed stream of income after paying into Social Security for at least ten years. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q2 2022 hedge fund letters, conferences and more   Find A Qualified Financial Advisor Finding a qualified financial advisor doesn't have to be hard. SmartAsset's free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you're ready to be matched with local advisors that can help you achieve your financial goals, get started now. Mega Millions. Lottery winners can choose between a lump sum or a payout with Mega Millions. Mega Millions pays out an annuity on a one-time basis. Then, twenty-nine annual payments are made, each five percent greater than the previous one. Powerball. Lottery winners can choose between a lump sum cash payout and a payout option when winning the Powerball jackpot. One payment Is paid immediately and then twenty-nine payments are made annually — each five percent larger than the previous one. Court settlement. In civil law, structured settlements are settlements that result from winning a case. Typically, settlements involve a one-time lump sum, followed by regular payments. These payments are distributed through an annuity. But, I’m not referring to those examples. Instead, I’m referring to the insurance product. Why? Because Annuities are rising in popularity. LIMRA reports that total U.S. annuity sales increased 22% to $77.5 billion in the second quarter of 2022. Since LIMRA began tracking annuity sales in 2014, these figures represent the highest quarterly sales since the fourth quarter of 2008. So, if you want to jump onboard, here’s an introduction to annuity types and examples. What is an Annuity? Annuities are financial contracts between annuity companies, like life insurance companies, brokerages, or investment companies, and annuitants, the holders, and recipients. Typically, annuitants purchase annuities from issuers, either as lump sum payments or regularly over time. In the meantime, the annuitant’s money is invested by the annuitant. This is called a premium or purchase payment and eventually, payments are made according to the annuity type. In the United States, annuities are regulated by the Securities and Exchange Commission (SEC) and by the Financial Industry Regulatory Authority (FINRA), a private, self-regulatory agency. Annuities usually form part of a retirement program and provide a steady income stream for as long as the annuitant lives. The annuitant should, however, make it part of his or her long-term retirement planning if he or she plans to use it as retirement income. It is possible to lose the value of the additional benefits, called riders, if the annuity is withdrawn before a certain age, usually 59 ½. Riders may be purchased to enhance an annuity, such as death benefits, which allow beneficiaries to inherit assets. It is also common for annuities to have a surrender period, usually during the first five to ten years after purchase. During this time period, if the annuitant withdraws funds or cancels, surrender charges will apply. In addition to income tax, early withdrawals are subject to a 10 percent tax penalty from the Internal Revenue Service (IRS). Types of Annuities There are a lot of ways an annuity can be structured, like how long payments are guaranteed to continue. In addition to lifetime payments, annuities can be set up so that they keep paying as long as the annuitant or their spouse, if a survivorship benefit is selected, lives. As an alternative, annuities can be arranged to pay out funds for a predetermined amount of time, such as 20 years. Immediate and Deferred Annuities When you deposit a lump sum, annuities start right away. Or they can be structured as deferred benefits. In the case of an immediate payment annuity, you start getting paid right away after you make the deposit. For example, an immediate annuity is when an individual pays a single premium, say $200,000, to an insurance company and receives monthly payments, say $5,000, for a specified period of time. Depending on interest rates and market conditions, immediate annuities pay out varying amounts. On the other hand, deferred income annuities don’t start paying out until a future date. In fact, you often can choose when you want to start receiving payments. If you want, you can hold off annuitizing the $200,000 or take action on the annuity until you’re 85, for example. The type of annuity you choose will determine whether some of your principal investment can be recovered. With a straight lifetime payout, the beneficiary won’t receive a refund, the payments will simply continue until they die. Any remaining principal in an annuity that is set for a fixed period of time may be refunded to the recipient or to their heirs if the annuitant has passed away. Fixed and Variable Annuities In general, annuities can be fixed or variable: Fixed annuities. Based on the annuitant’s contributions over a certain period, a fixed annuity pays a fixed rate. Accounts are tax-deferred during the accumulation phase, and fees are largely limited to surrender charges. The main advantage of fixed annuities is that they offer a predictable and steady income. Variable annuities. There’s no guaranteed rate with a variable annuity. Rather, its value changes based on the stock market index performance of its sub-accounts, which are like mutual funds. Fees associated with this type of annuity often exceed 2 percent, including fund management costs, administrative costs, and surrender penalties. Unlike fixed annuities, you can make more money with variable annuities. However, there is more risk involved. It should be noted that there’s another option known as indexed annuities. Their value, like variable annuities, is determined by the stock market index. When the index gains value, the company credits a portion to the account, and if it loses value, the account remains unchanged. An account’s allocation can, however, be limited by rate and yield caps. Annuities that offer both a fixed rate of interest and a stock market component are referred to as fixed indexed annuities. How Do Annuities Work In general, annuities work in several steps: Purchase. Annuitants purchase annuities from annuity companies, either in a lump sum or in installments. Payments can be received for a specific number of years, known as a period certain, or for life. Accumulation. During the accumulation phase, the annuitant makes deposits or the annuity company makes investments to fund the annuity. Upon making the first payment to the annuity, the annuitant enters this phase. Annuitization. Annuitants will receive payments from the annuity issuer after the accumulation period ends. Depending on the type of annuity purchased, payments will vary in size, method, and duration. Accumulative Annuity Example Annuities can be used to accumulate funds for a goal such as living a comfortable lifestyle in retirement. The first example is our good friend the fixed annuity. Remember that when you purchase a fixed annuity, you will know the interest rate up front. You’ll also know how long you will have to hold your money before withdrawing it. For those who want to know what will happen in the future and have peace of mind, fixed annuities are clutch. Another type of annuity that accumulates value over time is the variable annuity. An variable annuity differs from its fixed cousin in that you can select subaccounts. There are usually a variety of choices in the subaccounts, including money-market funds, bond funds, and investments linked to the market. You can increase your wealth over time by investing in this type of annuity rather than a fixed one. However, it could also lose value, including its principal. If you plan on turning your accumulated funds into retirement income, using a variable annuity can be an efficient way to take advantage of market-based investment growth. In order to get certainty, you should ask about the cost of any guarantees offered by a variable annuity. Just be aware that the fees for certain variable annuities may be high, depending on whether you need guarantees. On the flip side, some offer lower fees that are comparable to those associated with managed investment accounts over time. When you have an accumulation annuity, you can eventually withdraw your money and use it for whatever you want. Alternatively, it could be adapted into an income plan that will provide guaranteed income for life, or a limited period of time. Income Annuity Example In exchange for an up-front payment to an insurance company, a lifetime annuity ensures you a paycheck for a set period of time. No matter how long you live, your payments will continue. As a result, income annuities are a reliable tool for reducing the risk of outliving your retirement savings. Additionally, many income annuities offer what is called a period certain guarantee. Even if you die within that timeframe, say 10 or 20 years, the beneficiary will receive payments for a minimum number of years. What’s the key difference between an accumulation annuity and an income annuity? You cannot withdraw the principal from an income annuity. At the same time, you get your money back through guaranteed payments. Let’s now take a closer look at a few examples of income annuities. After you pay the insurance company, an immediate income annuity begins paying income shortly afterward. In most cases, immediate income annuities are the best choice when you’re looking to convert a lump sum into income as soon as possible, usually after retirement. You can purchase a deferred income annuity today for income that will start arriving several years later. It is also possible to earn dividends from a few companies, which can increase your future income significantly. When you’re looking to lock in future income, perhaps from recent investment gains, deferred income annuities are usually the best choice. You may be interested in a deferred income annuity if you’re in your 50s and want to lock in a guaranteed income that will be available in your 60s when you retire. Whenever your income annuity pays dividends, your guaranteed income will grow each year leading up to retirement — without you having to make any additional investments. FAQs Who buys annuities? For individuals who want a stable, guaranteed retirement income, annuities are an appropriate financial product. But, this financial product is not recommended for younger people or for those with liquidity needs because the lump sum into the annuity is illiquid and subject to withdrawal penalties. What’s more, it’s impossible for annuity holders to outlive their income stream, which mitigates longevity risks. Are annuities safe? Annuities are generally considered safe investments. Annuities should, however, be purchased from reputable, highly rated companies with a good reputation in insurance and financial services. This is partly due to the fact that annuities are not insured by the Federal Deposit Insurance Corporation like certificates of deposit. Depending on the state, the amount of protection may vary. In addition to regulating insurance companies, states require them to comply with financial standards designed to ensure their viability. A company that sells annuities must belong to a guaranty association in the state where it operates. The National Organization of Life & Health Insurance Guaranty Associations provides links to all state guaranty associations on its website. How much do you need to start an annuity? There are different fees and restrictions associated with each annuity. Moreover, investing requirements are different for different companies. You may want to consider how your annuity purchase will perform before deciding whether you can invest enough in one. As an example, let’s look at a fixed, immediate annuity with a 3% payout rate. You will receive payments equal to 3% of your investment each year. That means if you contributed $1,000, you would make a $30 annual payment. With $100,000, that would jump to $3,000. What’s an annuity fund? An annuity fund is a portfolio of investments in which annuity funds are invested. Annuity funds earn returns, which are used to pay annuity holders. In order to purchase an annuity, an individual must pay a premium to the insurance company. The insurance company invests the premium in an annuity fund, which is an investment vehicle which consists of stocks, bonds, and other securities. What is the surrender period? Surrender periods refer to the amount of time before an investor can withdraw funds from annuities without penalty. Surrender charges are basically deferred sales fees that apply to withdrawals before the surrender period ends. The period typically lasts several years. Withdrawals before the surrender period can result in significant penalties. Article by John Rampton, Due About the Author John Rampton is an entrepreneur and connector. When he was 23 years old, while attending the University of Utah, he was hurt in a construction accident. His leg was snapped in half. He was told by 13 doctors he would never walk again. Over the next 12 months, he had several surgeries, stem cell injections and learned how to walk again. During this time, he studied and mastered how to make money work for you, not against you. He has since taught thousands through books, courses and written over 5000 articles online about finance, entrepreneurship and productivity. He has been recognized as the Top Online Influencers in the World by Entrepreneur Magazine and Finance Expert by Time. He is the Founder and CEO of Due......»»

Category: blogSource: valuewalkSep 20th, 2022

Top 5 US-Focused Stocks Amid Surging Interest Rate and Dollar

We have narrowed our search to five domestic business-oriented U.S. stocks. These are: BJ, NEP, LNT, PBPB, ARR. Wall Street has been witnessing extreme volatility since the beginning of 2022, barring a two-month summer rally. Market participants continue to be affected by the after-effects of COVID-19 even though the infection has itself dwindled. These, along with the complete devastation of the global supply-chain system and shortage of labor, have caused the inflation rate to skyrocket to a 40-year high.In order to combat galloping inflation, the Fed has adopted an ultra-hawkish monetary stance unseen since 1994. Rigorous hiking of the benchmark interest rate and the adoption of a tighter monetary policy have resulted in a surge in U.S. currency.A higher interest rate regime has already raised the value of the U.S. dollar in the international market. At this stage, it will be fruitful to invest in stocks of domestic-business-oriented companies with a favorable Zacks Rank. Five such stocks are — BJ's Wholesale Club Holdings Inc. BJ, NextEra Energy Partners LP NEP, Alliant Energy Corp. LNT, Potbelly Corp. PBPB and ARMOUR Residential REIT Inc. ARR.Surging Interest RateThe U.S. inflation rate is currently at a 40-year high. In order to combat mounting inflation, the Fed raised the Fed Fund rate from 0-0.25% in early March to 2.25-2.5% in July. Yet, there are no signs of inflation cooling down. After back-to-back FOMC meetings in June and July, the Fed is set to hike the interest rate by another 75 basis points in September.A section of economists and financial analysts is expecting the central bank to raise the rate by 1% in the September FOMC meeting. Moreover, the Fed terminated the pandemic-led $120 billion of bond-buying program per month in March and has started reducing the size of its $9 trillion balance sheet from June.Consequently, the yields of U.S. government bonds soared. As of Sep 19, the yield on the benchmark 10-Year U.S. Treasury Note closed at 3.518%, its highest since April 2011. The yield on the short-term 2-year U.S. Treasury Note closed at 3.949%, its highest since 2007. This yield is most susceptible to the Fed’s rate hike strategy. The yield on the long-term 30-Year U.S. Treasury Note closed at 3.521%.Dollar-Index SkyrocketsAs interest rate surges in the United States, global investors are trying to hold U.S.-dollar denominated assets in order to get higher returns. Consequently, the ICE U.S. Dollar Index (DXY), which measures the greenback’s strength against a basket of six major currencies, has skyrocketed in 2022.As of Sep 19, the DXY closed at 109.586, climbing 14.6% year to date. The index is currently at its 20-year high. With respect to the U.S. dollar, the British pound is at a 37-year low, the Japanese yen is at a 20-year low and the euro is at a 20-year low. Further, currencies of several major emerging economies have fallen to their historic-low level against the U.S. dollar.Why Domestic- Focused Stocks?Market participants are concerned that a rising dollar will hurt the sales of U.S. multinational companies as their products will be more expensive in the international markets. Domestic business-oriented companies are mostly immune to any external shock since the United States is the lone market for their products.Despite the recent economic slowdown, aggregate demand in the U.S. economy is rock solid. Americans have more than $2 trillion in savings in the last two pandemic-ridden years. The Fed is trying to cool demand by an aggressive rate hike and liquidity reduction from the system to combat higher inflation.In order to fund expansion, these companies are less likely to take the debt route compared with their large peers. This makes them less sensitive to the interest rate movement and will help them to outperform the broader market.Our Top PicksWe have narrowed our search to five domestic business-oriented U.S. stocks that have solid potential for the rest of 2022. These stocks have seen positive earnings estimate revisions in the past 60 days. Each of our picks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy).  You can see the complete list of today’s Zacks #1 Rank stocks here.The chart below shows the price performance of our five picks in the past three months.Image Source: Zacks Investment ResearchBJ's Wholesale Club’s ability to steer the tough retail environment validates its strong customer value proposition and business model. BJ’s relentless efforts to boost membership base, simplify assortments, enhance digital capabilities and accelerate club openings should support sales. We foresee sustained improvement in membership fee income as new club openings ramp up.Markedly, BJ's Wholesale Club’s acquisition of the perishable supply chain from Burris Logistics puts it in an advantageous position to scale up supply chain capabilities and expand fresh food offerings. A jump of 6% in member count in the second quarter speaks about BJ’s ability to drive traffic. We estimate a 14.3% and 7.1% increase in total revenues in fiscal 2022 and 2023, respectively.BJ's Wholesale Club has an expected earnings growth rate of 10.8% for the current year (ending January 2023). The Zacks Consensus Estimate for current-year earnings of this Zacks Rank #1 company has improved 7.8% over the past 30 days.NextEra Energy is expanding domestic clean energy assets through acquisitions and organic initiatives. NEP has stakes in natural gas pipelines in Texas and gains from an increase in natural gas production.To enhance flexibility, NextEra Energy completed a few financing agreements to secure funds for acquisition. NEP benefits from declining installation costs and improving renewable technology. It has sufficient liquidity to meet obligations.NextEra Energy has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for current-year earnings of this Zacks Rank #2 company has improved 3.2% over the past 30 days.Alliant Energy has plans to strengthen and expand its infrastructure, retire coal-fired units, add clean assets to its generation and become carbon neutral by 2050. Electricity generated from clean assets will assist LNT in meeting demand from customers.Alliant Energy plans to invest $6.1 billion between 2022 and 2025. The returns from regulated assets provide it with earnings visibility. LNT operates primarily through four wholly owned subsidiaries – Interstate Power and Light Co., Wisconsin Power and Light Co., Resource and Corporate Services.Zacks Rank #2 Alliant Energy has an expected earnings growth rate of 6.5% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 1.8% over the past 60 days.Potbelly owns, operates, and franchises Potbelly sandwich shops. PBPB manages establishments for consuming food on premises and offers sandwiches, salads, soups, chili, chips, cookies, ice cream and smoothies. Potbelly serves customers throughout the United States.Zacks Rank #2 Potbelly has an expected earnings growth rate of more than 100% for the current year. The Zacks Consensus Estimate for the current year has improved more than 100% over the past 60 days.ARMOUR Residential invests primarily in residential mortgage-backed securities issued or guaranteed by a United States government-chartered entity. ARR’s securities portfolio primarily consists of the U.S. government-sponsored entity's and the Government National Mortgage Administration's issued or guaranteed securities backed by a fixed rate, hybrid adjustable rate, and adjustable-rate home loans, as well as unsecured notes and bonds issued by the GSE and the United States treasuries, and money market instruments.ARMOUR Residential sports a Zacks Rank #1. It has an expected earnings growth rate of 21.9% for the current year. The Zacks Consensus Estimate for the current year has improved 8.3% over the past 60 days. Special Report: The Top 5 IPOs for Your Portfolio Today, you have a chance to get in on the ground floor of one of the best investment opportunities of the year. As the world continues to benefit from an ever-evolving internet, a handful of innovative tech companies are on the brink of reaping immense rewards - and you can put yourself in a position to cash in. One is set to disrupt the online communication industry. Brilliantly designed for creating online communities, this stock is poised to explode when made public. With the strength of our economy and record amounts of cash flooding into IPOs, you don’t want to miss this opportunity.>>See Zacks’ Hottest IPOs NowWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report BJ's Wholesale Club Holdings, Inc. (BJ): Free Stock Analysis Report Alliant Energy Corporation (LNT): Free Stock Analysis Report ARMOUR Residential REIT, Inc. (ARR): Free Stock Analysis Report Potbelly Corporation (PBPB): Free Stock Analysis Report NextEra Energy Partners, LP (NEP): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 20th, 2022

5 Tips To Make Your Money Last For The Rest Of Your Life

No one likes to think about the end, but when it comes to money, it’s important to plan for retirement with a long-term mindset. Making your money last is something that all retirees and those planning for retirement have to think about. After all, no one wants to run out of money before they die. […] No one likes to think about the end, but when it comes to money, it’s important to plan for retirement with a long-term mindset. Making your money last is something that all retirees and those planning for retirement have to think about. After all, no one wants to run out of money before they die. The good news is that there are ways to make your money last for longer, making this something anyone can accomplish with a bit of patience, discipline, and self-control. In the following post, you’ll find a list of the top five tips to make money last for the rest of your life and even longer. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q2 2022 hedge fund letters, conferences and more   Find A Qualified Financial Advisor Finding a qualified financial advisor doesn't have to be hard. SmartAsset's free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you're ready to be matched with local advisors that can help you achieve your financial goals, get started now. Tip #1: Save, save, save. The most important thing you can do to make your money last is to start saving as early as possible. The sooner you begin to save, the more time your money has to grow. If you’re already retired, it’s not too late to start saving. Even if you only have a few years left until retirement, every little bit helps. The key to saving effectively is to live below your means. While this may sound like obvious advice, that doesn’t mean it’s less relevant. Living below your means is about spending less than you earn and investing the difference. If you can do this consistently, you will build up a sizeable nest egg that can last for decades. How to know how much you need to save There are several different approaches to knowing how much to save every month. As a general rule of thumb, you should do your best to save as much as possible after accounting for all necessary living costs like housing, food, transportation, and healthcare. However, saving “as much as possible” may not cut it, and you may need to take extra steps to ensure your money will last long enough. But how do you know if you’re saving enough or not? You still need a specific number to aim for, which is where the following approach comes in. You need to estimate how big your nest egg needs to be by the time you retire to provide enough income to pay for your desired lifestyle during retirement. This is done in two steps. You first need to know how long your money needs to last. That goes through deciding when you plan to retire and knowing how long you’re likely to live, which you can find in online life expectancy tables. Once you have that information, you can establish a monthly, quarterly, or annual withdrawal plan that provides enough income to pay for the lifestyle you want. You can then use an online calculator to determine the value of your nest egg so that it lasts the number of years you’ll likely have left. Once you get that number, you can use the same calculator to find out exactly how much you need to set aside every month, starting today, for your savings to grow into the nest egg you just calculated. Tip #2: Max out pensions and social security Pensions and social security are two of the most important sources of retirement income for many retirees. If you have access to either of these benefits, be sure to maximize them. Pensions are a type of retirement plan offered by many employers. They generally provide a fixed income for life, making them an ideal retirement income source. If you have a pension, find out how much income it will provide and when you can start receiving payments. Social security, on the other hand, is a government-provided retirement benefit available to all retirees. The amount you receive from Social Security is based on your earnings history and the age at which you retire. You can start receiving Social Security payments as early as age 62, but if you wait until your full retirement age, you’ll receive a higher benefit. How to max out your Social Security benefits If you’re still working, maximizing your Social Security benefits is to continue working and paying into the system for as long as possible. The longer you work, the higher your benefit will be. If your employer offers to match your 401(k) contributions, ensure you contribute all you can to get the full match. This is free money that can ensure your nest egg lasts as long as you need it, especially after compounding for several decades. In addition, if you’re married, you can also maximize your benefits by ensuring that you and your spouse are working and contributing to social security. This will allow you to receive two benefits when you retire, which can significantly increase your retirement income. This will also allow you to take advantage of spousal and survivor benefits. Survivor benefits provide a spouse income after the primary breadwinner’s death. In contrast, spousal benefits allow a lower-earning spouse to receive a benefit based on the higher-earning spouse’s work history. This can be as high as 50% of your spouse’s benefit, so if either of you earns significantly more than the other and maxed out your Social Security contributions, the spousal benefit can add a significant amount of retirement income. Tip #3: Purchase annuities for fixed income An annuity is a financial product that provides guaranteed income for life. There are two main types of annuities: immediate and deferred. Immediate annuities start making payments as soon as you purchase them. In contrast, deferred annuities grow tax-deferred over time and begin making payments in the future, such as when you retire. Some people choose to use annuities as a way to supplement their retirement income from Social Security and pensions. Others use them as a primary source of retirement income. The biggest advantage of an annuity is that it provides guaranteed income for life, and you can make that income as big as you want, depending on how much you put into it. Combined with your pension and Social Security benefits, an annuity can help cover your basic living costs like housing, transportation, and healthcare entirely. Things to look out for when purchasing an annuity There are many factors to consider when choosing the right annuity for your retirement. To start, you need to choose the right type of annuity. You have several options, including purchasing a deferred fixed annuity and paying it off monthly until you retire. Alternatively, you could invest your money in other ways before retirement and buy an immediate annuity with a single lump sum taken from your nest egg upon retirement. That way, you’ll automatically turn your lump-sum payment into a steady and guaranteed income stream. You need to be mindful of the costs associated with annuities. A plain, vanilla income annuity will be your cheapest option, and it will provide the highest possible income, but it comes with several strings attached. If you wish to retain access to your principal, have payments that increase over time, or have other special features, you will likely have to pay fees for those extra bells and whistles in the form of annuity riders. These fees can seriously add up and take a considerable chunk of your income, so be sure to read the fine print carefully before signing on the dotted line. The amount of money you put in an annuity is also an essential factor to consider. You should never put all your eggs in one basket, especially if that basket gets locked up for years before you can access it. It’s not wise to put all or most of your savings into an annuity to cover all your income needs during retirement. It’s smarter to use income annuities to supplement your income and cover the basics, investing only a small portion of your net worth. Tip #4: Establish passive income sources A passive income stream is one that doesn’t require much work on your part to maintain. This could include investment in income-producing assets like rental properties, dividend-paying stocks, and mutual funds. But there are hundreds of other ways to start earning passive income. Some common examples include: Creating and monetizing a YouTube channel Writing a book and earning royalties Sell original music as NFTs with royalties embedded into the smart contract Starting a blog about retirement lifestyles and using it for affiliate marketing Renting out your spare tools or even your car Creating and selling online courses Sharing photos on stock photography websites and more. The key to making passive income work for you is choosing an activity you enjoy and can see yourself doing long-term. That way, it won’t feel like work, and you’ll be more likely to stick with it. Once a passive income stream is up and running, it can provide a significant source of additional retirement income that can help make your nest egg last longer regardless of your health. On the other hand, you can also look for alternative sources of income that aren’t as passive. This could mean turning a hobby into a side hustle or taking up a part-time job that allows you to work remotely from a beach in Barbados. Tip #5: Budget, budget, budget Once you’re retired, it’s crucial to closely examine your expenses and ensure they align with your new income and lifestyle. Many people find that their spending patterns change once they retire, and that’s perfectly normal, but you need to know exactly how they changed. Creating a budget is the best way to keep track of and manage your expenses. Budgeting during retirement is a bit different from budgeting during your working years. For one, you’ll need to account for any changes in your income as time passes, whether from a reduction in Social Security benefits or a change in your pension payments. You’ll also need to factor in any new expenses, such as increased healthcare costs, and account for the possibility of inflation eating away at your purchasing power. There are many ways to approach budgeting in retirement, but one of the simplest and most effective is the 50-30-20 method. Under this system, you would allocate 50% of your monthly income towards essential expenses like housing, transportation, and healthcare. 30% would go towards discretionary spending on things like travel and entertainment, and the remaining 20% would be set aside for savings and investments that will help your money last longer. If your monthly retirement income doesn’t quite stretch as far as you’d like it to, there are a few ways to cut costs without sacrificing your lifestyle. You can read this post to learn about some ways to save retirement money. The bottom line With these five tips, you can help ensure your retirement savings last at least as long as you do. Purchasing an annuity, establishing passive income streams, and budgeting carefully are all key to making your money last a lifetime. You don’t have to be a millionaire to enjoy a comfortable and worry-free retirement, living life the way you want and always dreamed of. All it takes is a little bit of planning and some smart financial decisions along the way. Article by Jordan Bishop, Due About the Author Jordan Bishop discovered the power of credit cards at a young age. His first splash into travel hacking came with the wildly viral launch of Yore Oyster, which landed him national media attention and more than a million frequent flyer miles. He leveraged that opportunity to help tens of thousands of people save millions of dollars on flights, all while globetrotting the world......»»

Category: blogSource: valuewalkSep 16th, 2022

The Accurate Guide To Retirement Annuities

Is your retirement income sufficient? Can you count on it being enough for life so that you will not run out of money when you reach old age? If you haven’t answered these questions, it’s about time you do. As one example, a survey by Schroders indicates that people expect to need an average of […] Is your retirement income sufficient? Can you count on it being enough for life so that you will not run out of money when you reach old age? If you haven’t answered these questions, it’s about time you do. As one example, a survey by Schroders indicates that people expect to need an average of $1.1 million to retire comfortably, but only 24% expect to reach that threshold. In addition, 56% of respondents expect to save less than $500,000, including 36% who will save less than $250,000. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q2 2022 hedge fund letters, conferences and more   Considering that people are living longer worldwide, that should shake you to your core. In fact, between 2020 and 2050, the number of elderly people aged 80 or older is expected to triple, reaching 426 million. So, yeah. You’re going to need a solid nest egg. But, you also need a guaranteed income that you won’t outlive. That’s a tall glass to fill. However, a retirement annuity might just do the trick. Retirement Annuities: What Are They and How Do They Work? With a retirement annuity, you put money aside to receive an income in retirement. A schedule is outlined for the payment of this income. The payment is usually made monthly, quarterly, or annually. Overall, in your golden years, you will have peace of mind knowing that you have a reliable income stream. Buying a retirement annuity involves paying a premium. The premiums for retirement annuities are usually paid either in a lump sum or over time. But, this depends on the type of contract you sign. Retirement annuities can be divided into three categories: fixed, variable, and indexed: Fixed annuities. There is a minimum rate of return on the premium dollars invested with this type of annuity. There can be periodic or even annual adjustments to the rate. As an example with a Due Fixed Annuity, your get 3% a month on your money. With a monthly deposit, you’ll always know how much money you’ll have when you retire. Variable annuities. Payments into a variable annuity are invested in one or more of its subaccounts. The concept of sub-accounts is similar to that of mutual funds. Depending on the performance of the sub-accounts, the value of the annuity will vary. Indexed annuities. Indexed annuities are based on indices, like the S&P 500, and offer returns based on percentages of those indices. Additionally, index annuities generally guarantee a minimum return. Immediate vs. Deferred Retirement Annuities It is important to note that some annuities are immediate, meaning that payments can begin as soon as the annuity is purchased. With an immediate annuity, you pay the insurer a lump sum. These annuities are popular with older adults who want to ensure a regular income once they retire Deferred annuities, however, are used in the long run. You don’t get your money until a certain date after paying in. You have the option of earning interest or profiting from market gains before that date. Understanding Retirement Annuities The process of converting your annuity balance into income is known as annuitization. Your funds could remain invested indefinitely if your contract doesn’t require annuitization. In some cases, you may be able to take one-time withdrawals or designate a beneficiary to receive the money upon your death. In the event that you choose to annuitize, you will receive income based on: Your annuity’s accumulated funds. The investments that have been made with those funds. The duration of your income payments. Your income stream can last for a set period of time, like 20 years, or for the rest of your life. You might be able to adjust inflation as an optional feature. The Importance of Retirement Annuities In the face of retirement, an entire generation feels unprepared and unequipped due to the lack of pensions. In fact, the amount of Americans retiring with defined benefit pensions today is less than one-third (31%). No wonder a study by the Insured Retirement Institute shows that only 25 percent of baby boomers think they will have enough money when they retire. “Americans are living longer and face a variety of risks in retirement,” Michael Finke, a research fellow and dean, and chief academic officer of the American College of Financial Services, said in a 2018 news release introducing the Protected Lifetime Income Index research initiative. According to Finke, most retirees today use their retirement savings, such as IRAs or 401(k) plans, to pay for their retirement expenses. “If they had an annuity to accompany their savings and investments, [retirees] could always count on a source of guaranteed monthly income, which would reduce the risk of running out of money. And annuities are a solution that can provide that protected income for life,” added Finke. Additionally, a variety of studies have shown that retirees who receive guaranteed income in addition to Social Security are happier. Furthermore, a guaranteed lifetime income in retirement can provide a safety net during market downturns caused by unpredictable events like COVID-19. How Does a Retirement Annuity Pay Out? The way retirement annuities pay out determines the amount of income they generate. Depending on the type of retirement annuity, immediate or deferred payouts are available. Immediate Annuities An immediate annuity may be purchased as a lump-sum payment right before retirement by some buyers. As such, there is an upfront premium associated with immediate annuities. As soon as you pay the premium, you’ll receive monthly payments. Depending on the annuity terms, the payout usually begins under a year. In order to ensure steady payments throughout retirement, people close to retirement age should consider this option. Deferred Annuities On the other hand, deferred annuities can be built over several years. It is common for people to pay their premiums over time, but they don’t begin receiving their payout until after retirement. Depending on the type of annuity you have, your money will grow either through interest or through stock and bond market gains. Annuity Payout Options Again, depending on your needs, there are a number of different payout periods you can choose from. “Probably the most common is the life annuity with cash refund option,” explains State Farm agent Patrick Blevins. “With this option, if you’re still living once your initial investment has been paid out to you, you’ll keep receiving the same monthly payment for however long you live.” “If you don’t outlive your initial investment, your beneficiary will receive a lump sum payment based on whatever portion of the initial amount wasn’t paid out to you, so it guarantees the return of principal,” he adds. “Period certain options are popular too, where you or your beneficiary is guaranteed to receive payments for a specified number of years,” says Blevins. “If you live past that date, you’ll still continue to receive payments for the rest of your life.” How to Use Your Retirement Annuity Income There are several ways in which retirement annuity income can be used. Generally speaking, it should be used in a way that meets your retirement needs and goals. Some of the most common uses include: Covers your fixed expenses. As a supplement to Social Security, annuity income can be used to cover fixed expenses. These would be expenses like your mortgage, utilities, and groceries. Pays for your retirement lifestyle. Any retirement goals that you have planned can be funded from your retirement annuity income. For example, going on a vacation or picking up new hobbies. Keeps your spending in check. If you’re thinking about a retirement budget, it should include a stream of income, like an annuity and social security payments. By doing so, you avoid overspending. How? When you know what’s coming in, you can make more financially sound decisions. In these circumstances, retirement annuity income offers the advantage of protecting your retirement savings for other expenses that inevitably arise. The Advantages of Retirement Annuities There are two main reasons why people buy annuities: tax deferral and guaranteed income. Tax-deferred earnings. If you invest in an annuity, your funds will either earn a fixed rate of interest or grow with underlying investments. There are no immediate tax consequences associated with the resulting income. As with a 401(k), annuities do not need to be taxed until payments start coming in. Guaranteed income. As soon as you annuitize, the insurer is contractually obligated to pay you an income. In most cases, you’ll receive a monthly payment — often for life. Annuity benefits should be covered by your state’s guaranty association if your insurer goes bankrupt. You can find out the rules that apply to you by checking with your state. But, there are a couple of other benefits worth mentioning, such as: Guaranteed rates of return. There are some annuity contracts that offer guaranteed returns. Annuities, both fixed and indexed, can have this feature. Although your rate of return can certainly be higher, knowing there is a floor is nice. However, it is possible for this floor to result in a loss instead of a gain. No contribution limits. An annual contribution limit applies to 401(k) and IRA accounts and other tax-favored programs. However, retirement annuities do not have contribution limits. Survivor options. It is possible for survivors of a contract holder to choose from several options offered by annuities. Each insurer will have its own set of terms and conditions. A beneficiary option will typically be included in the contracts to designated beneficiaries upon the death of the account holder. In addition, there might be a joint and survivor option for a spouse, or a period certain option for someone not related to the spouse. The Disadvantages of Retirement Annuities Despite the advantages listed above, retirement annuities aren’t flawless. As such, you should also be aware of its disadvantages. Hefty fees. In comparison with mutual funds and CDs, annuities are expensive. In many cases, these are sold by agents, whose commissions are paid upfront. However, buying direct from the insurer can help you avoid those high upfront fees. Despite this, you may still be faced with significant annual expenses, often exceeding 2%. In addition, if you increase your coverage with special riders, you’ll pay even more. Early withdrawal penalties. Withdrawing funds from your retirement annuity before age 59 ½ will result in income tax and a 10% penalty. Illiquid asset. It is not possible to change the terms of the payments once you have annuitized. If you sell or surrender your annuity, you will lose some of your principal invested. Whenever you attempt to withdraw from your annuity within the first few years of your contract, you will incur a surrender fee. It usually takes 6-8 years for the surrender period to expire. Higher tax rates. One of the main selling points of these products is the tax-deferred status of interest and investment gains. You will, however, need to declare ordinary income when you withdraw your funds. In some cases, the capital gains tax rate is higher than the income tax rate. Complexity. There can be a lot of complexity involved with annuities. Sometimes, it can be difficult to understand what you’re paying for. Possibility of insurer default. It is the insurance company that issues the contract that guarantees annuities. Although there haven’t been many annuity defaults, it is possible. The guaranty association in your state provides backup for the insurance company. Before investing in an annuity contract, it’s a good idea to check the insurer’s financial stability. How Does a Retirement Annuity Fit into Your Retirement Portfolio Annuities can be a valuable part of your retirement plan. However, a well-rounded retirement plan should also include IRAs, 401(k) plans, life insurance, and other traditional financial tools. As a retirement income replacement, an annuity can also provide a source of income. Upon receiving the payout, you will continue to receive a steady, scheduled income for the rest of your life. In this way, retirement annuities protect you against outliving your retirement savings. In short, annuities give you financial flexibility in retirement by diversifying your retirement portfolio. To determine if an annuity is a good choice for retirement, it may be a good idea to speak with an advisor familiar with annuities. Ideally, you should avoid working with advisors who receive commissions when they sell annuities. And, as with any large purchase, always shop around. It would also be helpful to create a written financial plan to determine if an annuity is right for you. A financial plan can then include an annuity that fulfills a specific retirement goal. You may not be a good candidate for an annuity if it does not fulfill a specific financial goal. Frequently Asked Questions What is an annuity? In simple terms, an annuity involves a contract between you and an annuity provider. In many cases, through an insurance company. If you give the insurer money, they will guarantee that the money will be returned plus interest (deferred annuity) or that you will start receiving income fairly soon (immediate annuity). What is tax-deferred? While interest accrues on annuities, they aren’t taxed until they are withdrawn, which means they accumulate interest. As a result, annuity earnings increase. How can I protect myself when buying an annuity? It’s important to make sure that your insurer will be able to honor its commitment to you in the long run. It is easy to find financial strength ratings from agencies such as A.M. Best, Moody’s, Standard & Poor’s, and Fitch. The state insurance departments that regulate annuity insurers require them to file regular financial reports. Annuities are also protected from failure by state guaranty associations up to certain limits. Besides doing your research on the annuity company you’re considering, you can spread your annuity money across more than one insurer so you’re fully protected by the guaranty association if you’re investing a lot of money. What happens to my annuity when I die? There is one unique benefit to an annuity: the death benefit. Survivors of an annuity owner who die before all payments are disbursed can inherit the remaining assets. In the absence of a beneficiary, all remaining annuity assets are surrendered to the company that issued the annuity. Are there alternatives to annuities? Besides annuities, there are other options for long-lasting income without the fees and complexity of them. Two options that may be helpful to you are Social Security and dividend stocks. Social Security. Aside from annuities, Social Security is one of the few income streams that can last a lifetime. The amount of your Social Security benefit is determined by your earnings history. As you near retirement, you still have some influence over how much you receive. For example, raising your work income or delaying your benefits. A major advantage of Social Security over an annuity is that it does not require any upfront payments. Dividends. In addition to generating lifelong income, dividend stocks can also generate capital gains. This isn’t guaranteed, however. Dividends are always subject to reduction, suspension, or cancellation by a company. Some dividend stocks are more reliable than others, which is good news. Dividend Aristocrats, for example, are companies that have paid and increased dividends continuously for 25 or more years. In addition, Dividend Kings are a group of dividend increasers who have increased their dividends for more than 50 years. The dividend stock market offers more uncertainty than annuities, but it also offers a greater potential for income. With time, your stocks will appreciate, as well as you’ll earn dividend income. While it’s worth exploring retirement options that meet your needs, you shouldn’t put all of your eggs in one basket. In other words, to have a comfortable lifestyle in retirement, you should have a diversified portfolio. Article by John Rampton, Due About the Author John Rampton is an entrepreneur and connector. When he was 23 years old, while attending the University of Utah, he was hurt in a construction accident. His leg was snapped in half. He was told by 13 doctors he would never walk again. Over the next 12 months, he had several surgeries, stem cell injections and learned how to walk again. During this time, he studied and mastered how to make money work for you, not against you. He has since taught thousands through books, courses and written over 5000 articles online about finance, entrepreneurship and productivity. He has been recognized as the Top Online Influencers in the World by Entrepreneur Magazine and Finance Expert by Time. He is the Founder and CEO of Due......»»

Category: blogSource: valuewalkSep 14th, 2022

New York is bleeding millionaires, and San Francisco is winning them over. Here are the 20 cities with the highest number of millionaires in the world.

New York is still #1, but the city lost 12% of its millionaires in the first half of 2022. See the full list. Busakorn Pongparnit/Getty New York has the most millionaires of any world city, but lost 12% of them in the first half of 2022. The US dominates the list with a total of 6 cities in the top 20.  San Francisco had the highest number of billionaires of any city on the list.  Between the skyscrapers and bright lights, it seems like millionaires just can't pull themselves away from allure of the concrete jungle. According to a new report published today by Henley & Partners, a firm that tracks wealthy individuals across the globe, New York tops the list of 20 cities with the most millionaires in the world.The firm defines millionaires as anyone with $1 million or more in investable assets. That includes everything from cash, checking, and savings accounts to investments in stocks, government bonds, and mutual funds. Several cities across the US are quickly catching up to the Big Apple, though, due in part to New York losing 12% of its wealthiest denizens over the first half of 2022. The San Francisco area, which came in second, saw its billionaire index increase 4% over that time frame, according to data collected by the intelligence firm New World Wealth. On the whole, the US had the highest representation of any country on the list, with six of its major metropolitan areas claiming spots within the top 20. Across the world, Abu Dhabi and Dubai appear to have some of the fastest growing populations of millionaires, according to the report. While Russia — which has witnessed a mass migration of its moneyed classes in the past several years — had the largest outflow of millionaires of any country in the world. See the full list of the top 20 millionaire metropolises and megalopolises below. New YorkBusakorn Pongparnit/GettyNumber of millionaires: 16,207Number of billionaires: 59Total population: 8.4 million, according to the US Census Bureau. TokyoJackyenjoyphotography/ Getty ImagesNumber of millionaires: 7,613Number of billionaires: 12Total population: 37.3 million, according to World Population Review. San FranciscoA view of the San Francisco skyline, showcasing the Golden Gate Bridge and the Salesforce Tower.Dan Kurtzman/Getty ImagesNumber of millionaires: 13,513Number of billionaires: 62Total population: 815,000, according to the US Census Bureau. LondonSert/Getty ImagesNumber of millionaires: 9,616Number of billionaires: 38Total population: 9 million, according to London Datastore.SingaporeThe residence overlooks Singapore's Marina Bay area.Artie Ng/Artie PhotographyNumber of millionaires: 8,376Number of billionaires: 26Total population: 5.6 million, according to World Bank. Los AngelesOmerali Senakayli / EyeEm / Getty ImagesNumber of millionaires: 8,938Number of billionaires: 34Total population: Approximately 3.9 million, according to the US Census Bureau. ChicagoChicago, IllinoisGetty ImagesNumber of millionaires: 7,740Number of billionaires: 28Total population: 2.7 million, according to the US Census Bureau. HoustonMabry Campbell/ Getty ImagesNumber of millionaires: 6,904Number of billionaires: 25Total population: 2.3 million, according to the United States Census Bureau. BeijingDuKai photographer/ Getty ImagesNumber of millionaires: 6,633Number of billionaires: 44Total population: 19.6 million, according to National Bureau of Statistics of China (last reported in 2010). ShanghaiGetty ImagesNumber of millionaires: 6,530Number of billionaires: 42Total population: 23 million, according to National Bureau of Statistics of People's Republic of China (last reported in 2010). SydneySydney, Australia with Harbor Bridge and Sydney skyline during sunset.Prasit photoNumber of millionaires: 4,688Number of billionaires: 16Total population: 4.4 million, according to Australian Bureau of Statistics (last reported in 2011).Hong KongVictoria harbour, Hong KongFei Yang/Getty ImagesNumber of millionaires: 5,870Number of billionaires: 28Total population: 7.4 million, according to World Bank. FrankfurtDavid C Tomlinson/ Getty ImagesNumber of millionaires: 4,001Number of billionaires: 14Total population: 791,000, according to World Population Review. TorontoRoberto Machado Noa/ Getty ImagesNumber of millionaires: 4,347Number of billionaires: 17Total population: 6.7 million, according to Government of Canada 2021 Census report. ZurichWasin Pummarin / EyeEm/ Getty ImagesNumber of millionaires: 7,638Number of billionaires: 12Total population: 1.83 million, according to the Zurich Department of Mayor (last reported in 2011). SeoulTime, Life, Enjoy.../ Getty ImagesNumber of millionaires: 4,881Number of billionaires: 25Total population: 9.7 million, according to Seoul Solution. MelbourneJames O'Neil/ Getty ImagesNumber of millionaires: 3,629Number of billionaires: 12Total population: 5.1 million, according to the Australian Bureau of Statistics (last reported in 2021).  DallasDanny Lehman/ Getty ImagesNumber of millionaires: 4,551Number of billionaires: 18Total population: 1.3 million, according to the US Census Bureau. GenevaBoxun Liu / EyeEm / Getty ImagesNumber of millionaires: 8,645Number of billionaires: 16Total population: Approximately 200,000, according to United Nations (last reported in 2017). ParisThe Paris skyline at sunset.Getty ImagesNumber of millionaires: 2,441Number of billionaires: 15Total population: 2.16 million, according to Department of Paris (last reported in 2019).Read the original article on Business Insider.....»»

Category: topSource: businessinsiderSep 13th, 2022

Retiring At 35 (Without Giving Up Everything)

There are certain things that I would never give up. I’m talking about things like a delicious In-N-Out burger or my Netflix subscription. Okay, maybe I would give up Netflix. I mean, something’s gotta be up with the streaming service if it lost almost a million subscribers in the second quarter of 2022. However, when […] There are certain things that I would never give up. I’m talking about things like a delicious In-N-Out burger or my Netflix subscription. Okay, maybe I would give up Netflix. I mean, something’s gotta be up with the streaming service if it lost almost a million subscribers in the second quarter of 2022. However, when it comes to financial independence, you often hear people say that you have to give up certain things. And this is especially true if you’re trying to retire early. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q2 2022 hedge fund letters, conferences and more   After all, these are the same people saving something like 97% of their income. Obviously, that means it’s not in their budget to spend money on going out to eat or streaming services. But what if I told you that you can still retire early, specifically in your 30s, without sacrificing everything? While it may sound too good to be true, it’s definitely possible with a bit of patience and dedication. Be clear about your future plans - and stick to them Your first step? Establishing an honest estimate of your needs. But how exactly can you figure out how big your nest egg should be? Well, you need to take into the following three factors. Longevity. News flash. We’re living longer. As of 2022, the average life expectancy in the U.S. is 79.05 years. As such, if you’re planning on retiring at 35, you need to make sure that you can stretch your income for the next 35 years. Lifestyle. The next step is determining the lifestyle you would like to enjoy after leaving your job. To start, ask yourself the following questions after age 30: Would you still be interested in pursuing your hobbies and passions? Are you planning to travel, buy the latest gadgets, take classes, or do you think you’d like to do all these things? How much mortgage or rent are you willing to pay, and what kind of insurance protection do you want? Obviously, depending on your lifestyle vision, you will need to save a certain amount of money. The actual numbers. By the time you retire, Citizens Bank and Fidelity recommend saving 10 to 12 times your annual income. In other words, earning $100,000 per year, you should set aside $1 million to $1.2 million for retirement. However, your withdrawal rate may determine your goal number. Using your target withdrawal rate as a guide, divide your retirement spending by your yearly retirement spending. For example, if you plan to spend $40,000 after taxes every year and withdraw 2%, you would need $2 million ($40,000/.02) to retire. Obviously, inflation needs to be adjusted annually to the number you come up with. Creating a pre-retirement and post-retirement budget makes sense. A budget before retirement will keep you on track to reach your savings goal. But, a budget after retirement can help prevent you from running out of cash. Regarding budgeting, I suggest organizing it by needs and wants. Groceries, for instance, are essential. But, a delicious burger every week is a need. And although it may also be more necessary than desirable, make sure you have an emergency fund. Make a lifestyle change Controlling your expenses is the key to making changes, Steve Adcock, who achieved financial independence by 35 told me. “That means it’s like never going out to eat or very rarely. I think we gave ourselves like 50 bucks a month or something to go out to eat. I love going out to eat,” he adds. “For me, that was like the biggest, I guess, drawback or negative or sacrifice, or however you want to call it, to this whole business of retiring early.” “But we tracked our expenses so closely, that for a couple of years, we could have told you how much we spent on sweet potatoes, every single year.” Not just that, but everything else as well. It is not necessary to be as detailed as that. “But I would say that’s probably not required for everybody.” “What is required is knowing where you’re spending money,” Steve continues. Why? “Because it is impossible to cut your expenses if you have no idea where your money’s going anyway. How to keep your spending in check. The first step is so difficult, Steve warns. “Because you have to go through your credit card statements and bank statements and just understand where the heck your money is going.” Maybe you pay $150 a month for cable TV that you never watch. “But if you don’t check that bill and understand where that money is, you have no idea that you’re spending it because it’s all automated,” he says. The money is just taken out of your bank account without you thinking about it. “So those things are tough, it’s a tough habit, a tough pattern to get into.” “Once you do start making that progress, that snowball begins to build and becomes bigger, bigger and bigger,” says Steve. “And it becomes easier for you to realize what’s an expense that’s legitimate or what might be an expense that you can certainly cut out.” “For us, the majority of what we spent on, were expenses that we can cut out,” he adds. “We kept our gym membership because that was healthy.” Dining out cost us about $50 a month. Our biggest expenditures were food and our mortgage, of course. In addition, we didn’t spend much on magazines or cable TV. “We kept the internet for obvious reasons, but we really streamlined for those few years.” This allowed Steve and his wife to save a lot of money. Maximize your savings While saving is important, you’re not going to become rich simply by saving money. “Ordering water instead of soda or beer at restaurants might save you a few hundred dollars over the course of a year,” Steve wrote for CNBC. “But let’s face it: A few hundred bucks isn’t life-changing money,” he adds. “If ordering water were the Easy button to achieving early retirement, we’d all be retired and sipping margaritas in paradise.” The concept of compound interest doesn’t just appear out of nowhere, he adds. “Early retirement is enabled by household wealth. How much money you have, rather than how much you save.” “It is true that saving money does not lead to wealth,” states Steve. “That said, there’s nothing wrong with saving some cash by changing up the spending habits you developed over the years.” It’s great to save money. And, it can help. “It’s just not the secret sauce to early retirement.” “Wealth comes from a very different source: Investments,” Steve explains. But, how exactly can you maximize your savings? Give the following a try: Participate in your employer’s 401(k) match Contribute as much as you can to your 401(k) Consider money market and CD savings accounts that offer high-interest rates Don’t miss out on cashback opportunities Streamline your savings with automation While you are still employed, try to negotiate a raise Utilize credits and deductions to reduce your taxable income Increase your savings rate on a regular basis Save every dollar you earn from your second job or passive income Instead of beating the market, participate in it Speaking of investing, most FIRE followers opt for index funds over riskier, more volatile investments such as stocks or cryptocurrencies, notes CNBC. Generally, index funds are baskets of different stocks that aim to mimic the performance of a major stock index, such as the S&P 500. And, if you weren’t aware, is based on the market capitalization of 500 major U.S. companies. “The best advice I have is the conventional wisdom in the financial independence community is that it’s better to participate in the market than to try to beat it,” says Ed Ditto of Early Retirement Dude. “And one of the best ways to do that is to buy low-cost index funds. You’ll find that the Vanguard S&P 500 ETF is the darling of the FIRE set.” With index funds, you have access to stocks from a variety of industries. Because of this, investing in an index fund, which gives you a lot of diversification, puts you at less risk. The value of stocks from one industry might fall, but gains in another might offset it. In the 50-year period from 1970 to 2020, the S&P 500 has averaged 10.83% annual returns, according to Investopedia. The returns vary from year to year, depending on whether it’s a bull or bear market. It’s also not guaranteed that past performance will repeat itself. How to play the investing game. A trading platform like Vanguard, E*TRADE, or TD Ameritrade is an excellent way to get started investing. Unlike other trading platforms, these platforms don’t charge commissions for executing trades. Fees are charged by these platforms for the money you invest in funds, known as expense ratios. A passively managed fund has lower expense ratios than an actively managed one. In most cases, the expense ratio is expressed as a percentage. For every $1,000 you invest in a fund that charges a 0.15% expense ratio, you’ll pay $1.50. A robo-advisor, like Wealthfront, Betterment, or Charles Schwab, might be a smart place to start when building your investment portfolio. The goal of robot advisors is to get an understanding of your finances and future goals and then invest accordingly. Account fees are typically charged on top of fund expense ratios by robo-advisors. Don’t ignore the fine print when investing, so you know how much you’re paying. In addition to index funds, some FIRE followers invest in other asset classes that require a greater level of experience and knowledge. “As time goes along, and as your portfolio starts to build, you owe it to yourself to take new risks,” Kiersten Saunders of rich & REGULAR. “I think what people find when they get online is they start to see all of the hype and the buzz around crypto, NFTs, real estate, these types of asset classes that are either very risky or have high barriers to entry.” Go where it’s cheap I’m gonna be brutally honest. Unless you’ve inherited an insane amount of money or won the lottery, it’s going to be impossible to retire early and live in an expensive city. I’m talking about San Fran, NYC, Honolulu, or D.C. Instead, you’re probably gonna have to relocate. For example, Steve moved out to the Arizona desert. People who retired early, such as Kristy Shen and Bryce Leung, also relocated to a more affordable location. “We were spending nearly $3,000 a month on rent, and that was considered a good deal,” Scott Rieckens, who lived in Coronado, Calif., a beach resort across the bay from San Diego, told the New York Times. “We made something like $160,000 between the two of us, but we didn’t have a whole lot left over.” Rieckens became enthused after listening to an interview with Pete Adeney, aka Mr. Money Mustache, who The New Yorker called “the Frugal Guru” (he retired at 30). It was time for Reickens and his wife to ditch their leased BMW and stop eating out several nights a week. It’s all about “arbitrage” In spite of those lifestyle cuts, the couple couldn’t substantially increase their savings rate. Why? Because they have to move to a cheaper neighborhood. FYI, this is a deleveraging technique known as “arbitrage.” According to Adeney, the idea is “to reap the high salary” in a place such as Silicon Valley, “then take that nest egg out to any of the thousands of nice, affordable cities and towns we have in this country and begin the second stage of life on your own terms.” “I never paid attention to the finances. I thought it will all work out,” said Rieckens. “After I had a baby, I had stress around how I could spend more time with her. I was almost a slave to my job because of the way we were living.” After moving to Bend, Ore., in 2017, Rieckens and his family were able to buy a house since the state sales tax does not exist there. While Mr. Rieckens often rides his bike around town, gas for their used Honda CRV with 186,000 miles is a dollar-per-gallon cheaper than in San Diego. Savings require enough income Some people are able to retire early without making as many sacrifices as others. For example, someone might find great satisfaction riding a bike instead of driving a car to save money. But, a trade-off like this might not be possible for someone else. It’s a given that you have to earn enough money to retire early. As such, make sure your income covers your basics, and then save and invest a chunk of it for retirement. Everyone can’t do this. Having frugal habits won’t make up for not earning enough money to save aggressively for early retirement. If you aren’t earning enough to retire comfortably, then find ways to boost your income beyond your typical 9-to-5 job. According to the IRS, this type of work is called “material participation,” which means any work you do on a “regular, continuous and substantial basis.” Material participation is determined by several factors, such as working over 500 hours on a project or job. In retirement, however, you would like to focus on something else. The only option left is passive income generation. In terms of both asset allocation and income generated, make sure your portfolio’s fixed-income portion is adequate. Assets that generate passive income include: Annuity plans Dividends from securities P2P lending Rental Properties Passive income can even come from side hustles like blogging or self-publishing an ebook. Remember, personal finance is personal. Although I like some of the Fire Movement’s ideas, I think people need to realize that personal finance is, well, personal. In other words, do whatever works best for you. And, for some, that doesn’t mean saving 70% of your income. It’s more important for me to know if you think saving 10%, 5%, and getting that free match is enough. I’ve seen people nearing retirement and having the biggest regret of wishing they had started earlier or saved more. It’s something I’ve heard countless times. Perhaps it isn’t 70%. But it must be more than five or 10% unless you just love the work and want to work until you’re 65. There is a possibility that you have a pension, but it is less likely. After all, today, fewer than one-third (31%) of Americans retire with defined benefit pensions. And, putting all your trust in social security is a bad idea. In short, make it happen for yourself by taking control. Commit to your retirement plan but enjoy life too. “You can’t live your life in a way where it feels like a sacrifice, because that’s just not going to work,” says Steve. “Nobody likes to live that way.” “And what I like to do, is I like to encourage people to think of money as a representation of time,” he adds. “And this is especially true if you have a goal of early retirement.” Suppose you want to retire at 40 or 50. Are you willing to spend that much time on that new car? “If you want a $50,000 car, depending on how much you make in salary, is that worth working another year, working in another two years, so you can afford to buy that car?” Steve asks. “If you think that it’s worth it, if you do, if you’re okay with working longer in order to fund your lifestyle, that’s fine.” That’s perfectly fine. It’s just a matter of choosing. “And that’s effectively how we got up to 70%, “ he says. “Because for me, I wanted to retire early, so bad that nothing, nothing was worth the extra time, for the most part.” Except for the gym and occasional restaurant trips. For Steve, there were exceptions, such as the gym or occasional restaurant trip. “And I think we had Netflix that we were paying for at the time.” The big expenses, however, weren’t worth it for Steve and his wife. “It wasn’t worth working longer.” Frequently Asked Questions Is it possible for you to retire early? This question can be difficult to answer if you haven’t decided where you’ll live or how you’ll spend your retirement. The ideal situation is for you to either replace your current income or have sufficient savings to cover your current lifestyle or essentials. If you have other retirement goals, your current budget may need to be adjusted. For example, maybe you never considered moving. But, to reach your goal of retiring early, you might have to move. You should also consider all of the “what if” scenarios possible. After determining your long-term spending goals, you’ll be able to determine how many additional working years and savings could affect them. How much money do I need to retire early? There are a number of factors that influence an individual’s retirement income. Retirement age, monthly expenses, Social Security benefits, and life expectancy are taken into account. ‌To ensure a comfortable retirement, you should consult a financial advisor. How is Social Security impacted by early retirement? “Workers planning for their retirement should be aware that retirement benefits depend on age at retirement,” notes the Social Security Administration. “If a worker begins receiving benefits before his/her normal (or full) retirement age, the worker will receive a reduced benefit. A worker can choose to retire as early as age 62, but doing so may result in a reduction of as much as 30 percent.” “Starting to receive benefits after normal retirement age may result in larger benefits,” explains the SSA. “With delayed retirement credits, a person can receive his or her largest benefit by retiring at age 70.” For each month before the normal retirement age, you lose 5/9 of one percent of your benefit. When the number of months over 36 is exceeded, the benefit is reduced by 5/12 of one percent per month. “For example, if the number of reduction months is 60 (the maximum number for retirement at 62 when normal retirement age is 67), then the benefit is reduced by 30 percent,” adds the SSA. “This maximum reduction is calculated as 36 months times 5/9 of 1 percent plus 24 months times 5/12 of 1 percent.” When can I make penalty-free 401(k) withdrawals? You can usually withdraw funds from your 401(k) after age 59 1/2 without incurring penalties. You are required to take the required minimum distributions by the time you turn 72 (or 70 1/2 if you were born before July 1, 1949). In the event of later retirement, you must take the required minimum distributions by April of the following year. What are the drawbacks to early retirement? Early retirement carries a lot of financial risks unless you have plenty of savings or multiple income sources. In fact, for some, early retirement can bankrupt your dreams before of the following: Retirement often lasts longer than planned. There may be a temptation to take social security benefits before the age of 70 when benefits peak. You’re missing out on the power of compounding interest. You’ll be in medical coverage limbo without a plan from an employer. Or, until you’re eligible for Medicare at 65. Did you know that the average American has $90,460 in debt? Credit cards, personal loans, mortgages, and student loans all fall under consumer debt making early retirement a challenge. You have less flexibility without a recurring income. And, it may be difficult to reenter the workforce. Your savings may be insufficient. Plus, you may succumb to lifestyle creep or deal with market downturns. Retirement comes with feelings or boredom and isolation. Article by Jeff Rose, Due About The Author Jeff Rose is an Iraqi Combat Veteran and founder of Good Financial Cents. He teaches people wealth hacking. He is a frequent on CNBC, Forbes, Nasdaq and many other publications. He is author of the book "Soldier of Finance: Take Charge of Your Money and Invest in your Future" where he teaches how he escaped from $20,000 in credit card debt to a life of wealth......»»

Category: blogSource: valuewalkSep 6th, 2022

13 countries that hit the sweet spot between cheap housing and good quality of life for US expats

If you're looking to move abroad, many countries across the globe can offer US expats relatively affordable cost of living and good quality of life. Sao Paolo, Brazil.Getty Images More Americans than ever are working remotely — it's led to an uptick in homebuyer migration. While some will relocate within the US, others may consider a move to another country entirely. There are many countries around the world where expats can live affordably.  So you're thinking about moving abroad?For many Americans, the demise of the daily commute to the office has opened up a whole new world of possibilities about how and where to live. As more companies transition to the hybrid or remote work model, a study from freelancing platform Upwork, shows that 18.9 million Americans now plan on moving to a new home. The Upwork findings come from a survey of over 23,000 people. According to the company, 28% of respondents say they intend to move more than four hours away from their existing residence."From working habits to commuting patterns, there is an undercurrent of change," Upwork researchers wrote. "This is especially true when we look at the geographical implications of remote work. For the first time, remote work allowed many people across the country to see a life in which the location of their job and where they live did not have to be one and the same."While many Americans will relocate to a housing market within the United States, others may consider a move to another country. To determine where American expats can live comfortably, Insider ranked the most affordable housing markets across the globe that can also offer a good quality of life. To get a sense of potential top countries for Americans to move to, we used house price-to-income ratios data from the International Monetary Fund, the most recent Human Development Index, and an analysis on the average cost of a 2-bedroom flat in the city center from financial site Finder. We looked at the 57 countries excluding the US for which data was available from these three data sources.After sorting through dozens of countries, we were able to identify the places outside of the US where Americans can live relatively inexpensively and that also have a high standard of living based on the average rank of the three sets of data we used.If Americans are daring enough to make the miles long journey, Ireland — which tops our list — not only offers them a relatively low cost of living, but also breathtaking views of nature. The same can be said for Peru and countless other countries that round out our top 13 list.Read on to see where US expats can get the most bang for their buck. Finder's analysis gave home prices in pounds, but we converted the average cost of a 2-bedroom flat to US dollars at the exchange rate as of August 29 for the 13 countries below.12 (tie). IndiaMumbai City, India.Getty ImagesHouse price-to-income ratio: 87.175Human Development Index: 0.645Average cost of a 2-bedroom flat: $85,539.21The populous country may be an attractive place to reside for some Americans looking to move.Although the US may be a more expensive place to live in than India, some cities in India are more expensive to live in than others for international employees looking to live in the country. Expats wanting to move to India should check out what kind of visa they need and their requirements, such as for the employment visa.Residential real estate sales in the country have been strong based on data for the first half of 2022. And a post from Morgan Stanley wrote that "after being in doldrums for the past 3 years, India's real estate sector is set to recover," adding that housing demand increases "as more of India's population heads to the cities."12 (tie). BelgiumGhent, Belgium.Getty ImagesHouse price-to-income ratio: 108.263Human Development Index: 0.931Average cost of a 2-bedroom flat: $201,582.28Belgium, a European country with a population of over 11 million, highly ranked for its gender parity, and with approval of a four-day workweek option, may interest some people looking to move out of the US. Expats moving to Belgium should check what visa is best for their situation, such as a work visa or its Golden Visa.Financial services company ING highlighted in an article a few months ago that the housing market in the country had been robust throughout the pandemic and predicted that house price growth will moderate. Deloitte's 11th edition Property Index - Overview of European Residential Markets also gives some sense on what demand has looked like for this and other countries."The high demand for product remained during the year 2021," the report said. "This supported the ever-increasing housing prices and is decreasing the affordability of housing in Belgium. This is pushing more and more households to the rental market and obliges them to stay there for a longer period in time."11. BulgariaA city view of Bulgaria.Getty ImagesHouse price-to-income ratio: 99.113Human Development Index: 0.816Average cost of a 2-bedroom flat: $92,587.21Bulgaria is another country that made our list. Expats may enjoy heading to the Bulgarian Black Sea Coast or the country's mountains. Its lower cost of living than the US may be an attractive option for Americans looking to move here, especially retirees as it ranks as the second cheapest country to retire on Expatra's ranking. The country has seen its population decline though, in part because of emigration.Supply woes can be a challenge for the real estate market in Sofia, the country's capital. The managing director and head of research of Bulgarian Properties wrote in a post that the real estate market in Sofia was "characterized by very high demand and insufficient supply" for the first half of 2022. The managing director of the Bulgarian real estate company added that this "explains both the accelerated price growth and the slowdown in sales growth."9 (tie). BrazilSao Paolo, Brazil.Getty ImagesHouse price-to-income ratio: 84.141Human Development Index: 0.765Average cost of a 2-bedroom flat: $97,275.17Brazil, one of the most populous countries, also made the list based on the data sources we used. The country, with over 200 million people, is one place where people can get a digital nomad visa; that may interest some US remote workers that want to move away.InterNations' Expat Insider 2022 report found the country ranked high on a few categories, such as for leisure options, local friendliness, and ease of settling in.Brazil's housing index has gone up over time. International property investment specialist BRIC Group wrote that the country is having a "booming property market," citing ABRAINC Q1 2022 data showing an increase in new properties sold from the same time in 2021.9 (tie). IndonesiaJakarta, Indonesia.Getty ImagesHouse price-to-income ratio: 84.887Human Development Index: 0.718Average cost of a 2-bedroom flat: $87,893.62As Fortune reported, Indonesia ranked as the second best place for expats according to InterNations' Expat Insider 2022 report. The report notes that almost three-quarters of expats in the country see the cost of living positively.As Insider's Amanda Goh reported on expats, there is demand in Bali in Indonesia."The last 18 months — I've never seen it been busier in Bali," Nathan Ryan, the founder of Bali Realty, previously told Insider. "In terms of sales numbers, we're probably doing three to four times the volume of our usual average from the last decade."Americans may also be interested in the country's digital nomad visa. 8. FinlandHelsinki, FinlandGetty ImagesHouse price-to-income ratio: 96.168Human Development Index: 0.938Average cost of a 2-bedroom flat: $270,699.66Finland may been part of the top of our list in part because of its high Human Development Index, but the country also ranks highly in other rankings not part of our analysis. It's known as the happiest country in the world, according to the World Happiness Report. It also ranks highly for its gender parity, ranking second in the World Economic Forum's Global Gender Gap Report 2022.The housing market in this Nordic country looks different than its peers. "According to a recent Statistics Finland report, Finland is the only Nordic country with regions where residential property prices have been falling for some time," economist Juho Nyholm and senior economist Katja Ahoniemi of the Bank of Finland wrote in May. "This has contributed to the fairly level price trend for the country as a whole."7. North MacedoniaA city view of North Macedonia.Getty ImagesHouse price-to-income ratio: 88.021Human Development Index: 0.774Average cost of a 2-bedroom flat: $63,275.58North Macedonia is one of the oldest inhabited regions of Europe — but that doesn't mean its citizens are averse to change. In 2019, after a years long dispute with its neighbor to the south, Greece, the country formally changed its name — solidifying itself as an independent sovereign nation. In the year following, it joined the North Atlantic Treaty Organization, further demonstrating its determination to become a force among global powers. As the country's reach grows, its real estate market is blooming. Macedonia news outlet Republika reported that although housing activity has been "dormant" in the country for years, apartment prices have increased in the country's capital, Skopje, by 12.4% since 2021. 6. PeruLima, Peru.Getty ImagesHouse price-to-income ratio: 77.046Human Development Index: 0.777Average cost of a 2-bedroom flat: $96,103.18Each year, foreigners from all over the world come to Peru to witness its natural beauty. Home to one of the seven wonders of the world, Machu Picchu, the country receives millions of visitors. Peru's tourism industry has stimulated its economy making it one of the fastest-developing countries in South America. As foreigners visit Peru, its real estate sector has also blossomed — especially in the country's capital Lima. Despite a slowdown in buyer activity during the early stages of the pandemic, demand for housing has returned to the city. The New York Times reported that home prices in Lima rose by 14.7% year over year in February. 4 (tie). RomaniaVictory Avenue in Bucharest, Romania.Getty ImagesHouse price-to-income ratio: 80.375Human Development Index: 0.828Average cost of a 2-bedroom flat: $106,651.09Bordering the Black Sea, Romania is a mountainous country with castles, monasteries, and churches that line its hillsides. Like many countries around the world, the Covid-19 pandemic disrupted Romania's housing market. During the initial outbreak of the virus — and similarly to the United States — housing demand and supply fell sharply in the country, according to the Bucharest University of Economic Studies. However, the population's interest in homeownership has since reemerged. Romania-Insider reported the country's construction projects increased by 6.5% year-over-year in the first quarter of the year — marking the strongest pace of growth since the onset of the pandemic.4 (tie). CyprusCape Capo Greco, Cyprus.Getty ImagesHouse price-to-income ratio: 89.303Human Development Index: 0.887Average cost of a 2-bedroom flat: $113,683.03Located in the eastern Mediterranean sea, Cyprus is a paradise of picturesque beaches  and towering mountains. However, the country is not only known for its beautiful landscape — the original "Island of love" is said to be Greek goddess Aphordite's birthplace. And just like the enchantress herself, Cyprus lowers millions of tourists to its shores each and every year. If foreigners want to live on the island long term, they can participate in the country's golden visa program, which paves the way to permanent residency with an investment of $351,564 or citizenship with a real estate purchase of $2,343,760.Buyers should prepare for a hot housing market that has been stimulated by real estate investment throughout the Covid-19 pandemic. According to real estate database Property Expert Cyprus, in the first five months of the year, real estate transactions increased 42% from the same time period in In 2021.3. United Arab EmiratesAbu Dhabi, United Arab Emirates.Getty ImagesHouse price-to-income ratio: 71.323Human Development Index: 0.890Average cost of a 2-bedroom flat: $162,906.61Hailed as one of the fastest-developing countries in the world, the United Arab Emirates' business friendly climate has made it suitable for investors from almost every sector — especially real estate.  In July, one of the country's most famous cities, Dubai, introduced a law that aims to stimulate real estate growth in the region. The National News reported the law will allow "certain privileges to real estate investment funds" in an effort to increase the country's position as a "global destination for real estate investment."  That's not the only privilege real estate provides expats in the UAE — through the country's golden visa program, foreigners can obtain permanent residency with the purchase of a $544,499.20 home.2. TurkeyIstanbul, Turkey.Getty ImagesHouse price-to-income ratio: 86.189Human Development Index: 0.820Average cost of a 2-bedroom flat: $55,073.19Turkey is one of the most diverse countries in the world. Home to Istanbul — one of the only cities in the world located on more than one continent, it is a melting pot of both oriental and European culture. As such, the country's population is multicultural, boasting more than 4 million foreigners as of 2020. With so many expats, it's not surprising that Turkey's real estate market is ripe with foreign investment. Data shows that home sales to foreigners rose 81.8% in June compared to the same time period in 2021. For many expats, the country's golden visa program is a good incentive to purchase property — although it will cost them $250,000. The controversial passport program, which has been adopted in countries throughout the world, allows wealthy individuals to obtain permanent residency or citizenship through investment in either real estate or business.1. IrelandDublin, Ireland.Getty ImagesHouse price-to-income ratio: 93.853Human Development Index: 0.955Average cost of a 2-bedroom flat: $237,913.97Known as the Emerald Isle, Ireland is renowned for its wildlife and natural beauty. Each year, millions of foreigners come to the small island to visit its national parks and partake in its numerous festivals. As Reuters reported, Ireland's real estate market is suffering from an imbalance of inventory and demand that has driven home prices to highs not seen since 2007 — a time when increased housing construction and investment led to a housing downturn in the country. However, despite significant price growth, experts say a repeat is unlikely and forecasts project that appreciation will slow to 4% by the end of 2022.How we came up with this rankingTo create this ranking, Insider looked at house price-to-income ratios for 57 countries excluding the US available on the International Monetary Fund (IMF) site. That data from the second quarter of 2021 comes from the Bank for International Settlements and World Economic Outlook.We also looked at the most recent Human Development Index for those 57 particular countries to get a sense of places with high standards of living. According to the United Nations Development Programme, this index "is a summary measure of average achievement in key dimensions of human development" including having "a long and healthy life."To get a sense of prices for these various countries, we looked at research from Finder. That analysis looked at 106 countries' average cost, in pounds, of a 2-bedroom flat in the city-center, including the US. We only looked at the 57 countries excluding the US we had data for from the IMF.We then ranked each of the three rankings separately for each of the 57 countries where a lower house price-to-income ratio meant a better rank, a less expensive flat meant a better rank, and a higher Human Development Index meant a better rank. We then found the average of these three ranks for each country. We then ranked the countries based on these averages, where a lower average meant a better spot on our list. For instance, since Ireland had the lowest average among the 57 countries we looked at, it ranked number one.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderAug 31st, 2022

When Do Immediate Annuities Start Paying

How do you plan on spending your golden years? Perhaps exploring exotic locations or embracing the culture? Or, maybe you want to spend as much time as possible with the grandkids. No matter your retirement plans, even the most adventurous seniors may consider investing in something commonly referred to as “plain vanilla”: fixed immediate annuities. […] How do you plan on spending your golden years? Perhaps exploring exotic locations or embracing the culture? Or, maybe you want to spend as much time as possible with the grandkids. No matter your retirement plans, even the most adventurous seniors may consider investing in something commonly referred to as “plain vanilla”: fixed immediate annuities. There is no question that the fixed immediate annuity is the simplest of all the annuity options. In most cases, the contract begins delivering steady income within 30 days of the investor buying it. And in all cases, within 13 months after purchase. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q2 2022 hedge fund letters, conferences and more   On the other hand, variable immediate annuities provide income quickly as well. But their payments vary. The reason? Depending on the performance of the underlying portfolio, the amount fluctuates. A lump-sum payment is exchanged for regular income with an immediate annuity, regardless of the type. In most cases, these income payments will last for as long as the contract holder is alive, whether paid monthly, quarterly, semiannually, or annually. It could also be for a set period of time, such as 10 or 20 years, depending on the terms of the contract. Overall, purchasing an immediate annuity can provide you with a consistent source of income if you don’t have a pension plan when you retire. However, you should read the following information before signing any contracts for an immediate annuity to understand how they work. Most importantly, when immediate annuities start paying out. What is an Immediate Annuity, and How Does it Work? Here’s what we need to clarify. First, an immediate annuity isn’t as liquid as, let’s say, your emergency funds. In other words, it cannot be accessed as easily as an emergency fund. However, the annuity contract lets you start receiving payments immediately after purchase, so once you’ve purchased it, you can begin accepting payments right away. As a result, if you’re already retired and need a guaranteed income to cover living expenses or medical costs, you’d be better off with an immediate annuity rather than a deferred annuity. I understand. There might be something fishy about this type of annuity contract. Let’s explore immediate annuities in more detail. In the insurance world, this is known as a single premium immediate annuity (SPIA). An insurance agent/company, broker, or financial advisor will receive regular payments after you pay a lump sum, aka premium. A deferred annuity involves delaying payments for a year or more – unlike an immediate annuity, where payments are distributed immediately after purchase. As an annuitant, you can also decide how often payments are made. Depending on the “mode,” you can receive payments every month, quarterly, or even annually. Many people supplement their retirement income with immediate payment annuities. Buying an immediate annuity is an excellent way to secure a steady income for life or a set period of time. Your monthly payments will vary depending on factors such as your age, interest rates, and how long you wish to continue making payments. For example, a fixed interest rate is usually associated with immediate annuities, but only for a limited period of time. An immediate variable annuity is available from some insurers, however. They fluctuate based on underlying portfolio performance, just like variable deferred annuities. Another option is an inflation-indexed or inflation-protected annuity, which increases payments based on inflation. Types of Immediate Annuities The decision to purchase an immediate annuity is based on various factors, such as your age and financial situation. However, how immediate annuities are classified often determines that different types can be identified. Therefore, to choose the type that best suits your retirement plan, you need at least a basic understanding of these classifications. First of all, annuities are classified according to the returns they promise. Depending on the type, this can either be fixed, variable, or index. In addition, annuities can be classified according to their length of payment. Payments for annuities are typically made throughout a lifetime or for a specified period of time. There is no doubt that this can get very confusing very quickly. So now, let’s explore each annuity category in more detail. Variable Immediate Annuities A variable annuity’s payout rate depends on market performance, whether deferred or immediate. Due to this, they are similar to investment accounts such as 401(k)s and IRAs. A lump-sum payment is required to purchase a variable annuity. You will then select one of the subaccounts you wish to invest in. For example, mutual funds, like subaccounts, contain stocks, bonds, and money market funds. As a result, your annuity payout will increase when your investments perform well. Conversely, investing in bad investments will result in decreased annuity payments. Shortly put, variable annuities have growth potential. Historically, annuities of this kind have outperformed inflation and are tax-deferred. Despite this, it is also possible to lose money, and premature death is not protected. If you can handle short-term changes, you may want to consider a variable annuity. Also, if the market takes a turn for the worse, having a diverse portfolio would help cushion the blow. Fixed Immediate Annuities An annuity of this type works similarly to a CD. Your upfront payment is exchanged for regular income. Since you’re not playing the market, fixed immediate annuities do not carry the same risk as variable annuities. In turn, this creates a more predictable and stable annuity payment. There are, of course, some disadvantages to fixed annuities as well. Generally, you can expect lower returns from a fixed annuity. Additionally, because your money is locked up in a fixed interest rate, you can’t invest in more profitable investments. Finally, the value of your funds can also be diminished by inflation. However, your income will be reliable, and you will be protected against market volatility. Index Immediate Annuities This type of annuity is sometimes referred to as a hybrid between a variable and a fixed one. Your payments are based on a market index, like the S&P 500. As is the case with variable annuities, you can expect to receive a larger payment when the index performs well. Your payments will decrease, however, if the index drops. In addition, index immediate annuities come with caps and potential gains and losses. As a result, there’s less volatility than with variable annuities. As a result, your earning potential isn’t going to be as high in the good years. Nevertheless, the bad years won’t be as painful as they once were. Losses on immediate annuities are usually also capped. As such, your initial investment in the index annuity is secure. Term Immediate Annuities There are some people who do not need lifetime incomes. They could, however, pay off excessive debt or medical bills with an income stream over the next five to 20 years. But, on the other hand, perhaps you just need a little bit of time to prepare for another income source, like a pension or Social Security. A term annuity would be your best option in this situation. The premium is purchased with a lump sum, like other annuity types. You’ll receive payments over a specified period of time in exchange. In most cases, terms range from five to twenty years. As soon as the term ends, the payments end as well. If you pass away during the time period, the schedule payments will be transferred to your beneficiary if you pass away during the time period. People who need an income for a certain period of time are eligible for term immediate annuities. Additionally, they can be used to fund a life insurance policy, as this typically requires a fixed funding arrangement. Lifetime Immediate Annuities Is it possible to receive lifetime payments if you have your heart set on this? No problem. In addition, a lifetime annuity is available. Buying this contract will provide you lifetime payments, as you’ve probably guessed from the name. So, for example, you could set up a joint lifetime annuity that covers both of you for the rest of your lives. As long as at least one of you is alive, joint lifetime annuities will continue to pay lifetime payments. However, because this covers two lifespans, the likelihood that both of you will live a long and fulfilling life increases. A lifetime immediate annuity provides a reliable source of income during retirement, whether joint or single. The Advantages of Immediate Annuities What is the most significant advantage of an immediate annuity? What about a little peace of mind? In addition to providing a safe and dependable income, immediate annuities can provide lifelong benefits as well. Aside from these perks, immediate annuities also offer; There is no accumulation phase. In contrast to deferred annuities, immediate annuities don’t require accumulation. This means you can access your money within a month of purchasing the premium. Because of that, it is perfect for those who need funds immediately. Keep it simple. In most cases, you can set it and forget it with an immediate annuity. For instance, purchasing a fixed immediate annuity means you know exactly what the payments will be. Stabilizes your portfolio. An immediate annuity can even out assets whose values fluctuate if they are in a balanced portfolio. Investments that generate higher returns than certificates of deposit or Treasury bills. As long as your principal is protected, you may not earn as much as with riskier investments. There is no market exposure. You are protected from market volatility unless you choose a variable immediate annuity. Keeping your taxes under control. The tax-deferred nature of annuities means that you do not have to pay taxes until you begin withdrawing funds. There are no sales or administrative costs. In addition, an immediate annuity does not charge annual account management fees. Therefore, your monthly income will be credited with 100% of your premium. Easily customized. The amount and length of your payment are up to you. Additionally, you can choose between “Single” and “Joint” annuities. You can also attach a death benefit or protect yourself against inflation with riders. The Disadvantages of Deferred Annuities There are, however, some flaws in immediate annuities. In regards to immediate annuities, the following criticisms have been raised. Upfront costs are high. An immediate annuity is paid upfront in one lump sum. So, a deferred annuity might be a good choice if you don’t have enough money. It is irrevocable. I cannot emphasize this enough. There is no liquidity with annuities. The amount and frequency of payments you receive are determined after the annuity is fully set up. The annuity may not be available if you have an emergency. You may only be able to withdraw a percentage or pay surrender charges if you can make a withdrawal. Inflation can reduce their value. For example, a fixed annuity with an immediate payout could lose value due to inflation. To address this issue, you may want to consider purchasing a cost of living adjustment rider. It is possible for payments to decrease or cease. For example, upon your death, the annuity benefit will cease. But, beneficiaries can receive payments if a death benefit is added. It is possible, however, that their returns will be lower. When Does An Immediate Annuity Begin Making Payments? An immediate annuity is irrevocable, which means you cannot reverse the decision once you start the policy. The term “annuitization” or “annuitizing” refers to these irreversible income streams. Using SPIAs, you can either receive your annuity checks within 30 days or defer them for up to 12 months. If you wish to defer the income for more than 12 months, you might be interested in buying a Deferred Income Annuity or a QLAC. If you’d like retirement income for life but prefer more flexibility and control, consider a Guaranteed Lifetime Withdrawal Benefit. As a result of the income rider, the results will be comparable to the SPIA annuity but generally better. Immediate Annuity Payouts An immediate annuity is a series of payments made over time. Below you will find a brief description of how income annuities are paid out. Life Income A lifetime immediate annuity pays income for the life of the Annuitant. But no payments after the death of the Annuitant. So, choosing this option is not recommended if you want someone to receive payments after the Annuitant passes away. Joint and Contingent Life Income Income payments will continue as long as either the annuitant or contingent annuitant lives. Therefore, the joint-life income amount will be paid in full to the Annuitant for as long as they live. Contingent annuitants are paid for as long as they live, regardless of whether the Annuitant dies before them. However, payments will cease at the death of either the Annuitant or the contingent Annuitant. Income for a Fixed Period Guaranteed payments are available based on the number of years and months selected in the application. In addition, annuitants who die in a fixed period are entitled to a death benefit consisting of a lump sum equal to the commuted value. The death benefit recipient may elect to receive the remaining guaranteed annuity payments as an alternative to receiving the commuted value. An ordinary annuity or period certain annuity can also be called a fixed period annuity. Life Income with a Guaranteed Period Annuitants receive income payments for as long as they live. Should the Annuitant pass away during the guaranteed period, though, the remaining guaranteed payments will be paid to you or your beneficiary. Life Income with Installment Refund Annuitants receive monthly payments beginning on the income start date and will continue for as long as they live. Payments can continue to the primary beneficiary before the total payments equal the original purchase price if the Annuitant dies before receiving the annuity payments equal to the original purchase price. Life Income with a Cash Refund The Annuitant’s payments are guaranteed to continue for the duration of their life after the income start date. At the same time, annuitants who die before receiving at least the purchase price of an annuity will be compensated in a lump sum if they don’t receive the difference in the total annuity payments. Inflation Adjusted (Cost of Living Adjustment) This feature allows you to select an initial income amount less than the current inflation rate with annual increases. Immediate Annuity FAQs How can you fund an immediate annuity? Purchasing an immediate annuity requires a lump sum payment. Therefore, upon signing, you must pay the entire lump sum or premium upfront. Fortunately, various options are available for funding an immediate annuity. The first option is to use non-qualified sources of funding. In this category, you’ll find items for which you’ve already paid taxes, such as; Certificate of deposit (CD) Mutual fund proceeds Money market accounts Inheritance Life insurance settlement After-tax savings Deferred compensation A deferred annuity that was funded with the sources above In addition, qualified sources that you haven’t yet taxed can be used to fund the annuity, such as; 401(k) plans IRAs Simplified Employee Pension (SEP) plans Corporate-sponsored defined contribution plans Section 403(b) tax-sheltered annuities Section 1035 annuity exchanges Annuities previously funded with the sources above In case you’re wondering, the cost of an immediate annuity varies on your age and interest rates. Additionally, it’s not unusual for agents who sell immediate annuities to charge a 3% commission. What does “annuitization” mean? In annuitization, your premiums are transformed irrevocably into guaranteed income streams. In addition, when you annuitize your money, you receive certain benefits. A significant benefit of annuitization is that it disperses your interest over time. As opposed to disbursements, in which interest is paid before the principal, this type of payout is available through numerous annuity products. If your growth-based annuity has appreciated significantly tax-deferred, annuitization can be a powerful tool. Annuitizing can help you disperse your tax burden while generating an income stream that is guaranteed. Fixed immediate annuities require a minimum accumulation period of 30 days, while deferred immediate annuities require a maximum accumulation period of 12 months. What’s the return rate/payout on an immediate annuity? There are several factors to consider, such as the number of monthly payments the owner receives, age, gender, premium amount, and whether they have a single or joint life insurance policy. If you choose a fixed annuity such as Due, your money will earn a guaranteed 3% interest rate. That may sound too good to be true. But it’s not. How is my immediate annuity taxed? The source of funding and the type of annuity you are taking income from determine this. IRAs and 401(k)s are pretax retirement vehicles, so all their earnings are taxable because they haven’t been taxed before. However, due to the special Roth tax treatment, you do not have to pay taxes on income from a Roth IRA annuity. When using regular post-tax funds, it depends on what kind of income you have. Annuitized annuities consist of the return of premium and interest, as would be the case with immediate or deferred income annuities. However, taxes are imposed on the interest portion of the loan. You are fully taxed at first if you take distributions from a Multi-Year Guarantee Annuity or a Fixed Index Annuity. However, you’ll start receiving your original premium back once you’ve received all of your earnings from distributions. Since you will be earning interest again if you receive all your premiums back, your income will be taxable again. When should you consider an immediate annuity? Depending on your situation, an immediate annuity might be a viable option for you: As a retiree, you will need a reliable source of income. You begin receiving payments immediately, and you can rely on them for the rest of your life. During retirement, you want to generate a secure income. Article by John Rampton, Due About the Author John Rampton is an entrepreneur and connector. When he was 23 years old, while attending the University of Utah, he was hurt in a construction accident. His leg was snapped in half. He was told by 13 doctors he would never walk again. Over the next 12 months, he had several surgeries, stem cell injections and learned how to walk again. During this time, he studied and mastered how to make money work for you, not against you. He has since taught thousands through books, courses and written over 5000 articles online about finance, entrepreneurship and productivity. He has been recognized as the Top Online Influencers in the World by Entrepreneur Magazine and Finance Expert by Time. He is the Founder and CEO of Due. Updated on Aug 19, 2022, 4:50 pm.....»»

Category: blogSource: valuewalkAug 20th, 2022

Social Security Benefits About to Surge

All things considered, it is good to be retired today, at least as far as Social Security payments are concerned. In a bit of good news for aged Americans, Social Security payments may take their biggest jump in years. The surge could be as high as 10%, which is larger than recent increases in the consumer price index. The Motley Fool recently reported “Each fall, the Social Security Administration (SSA) announces its annual cost-of-living adjustment (COLA) for the following year, and 2023’s hike could be one for the record books.” Since some Americans rely completely on these payments, the effects on standard of living will be significant. About 65 million people collect some form of Social Security today. Social Security carries an official name of the “Old-Age, Survivors, and Disability Insurance (OASDI).” Even the rich can get benefits. The income calculation tops out at a maximum of $142,800. People with incomes above that are not penalized because they may not need the money. One anxiety people who receive payments now and will in the future have is that the Social Security funds will start to run out of money. This could begin as early as 2034. That means people working today may miss out on benefits as they retire. Among the solutions suggested is that the maximum income that is taxed is higher than the current level. The age at which people can start to be paid also could be moved above 62. Each of these still has the effect of robbing Americans currently in the workforce of benefits older Americans have today. 24/7 Wall St. 10 Tips to Get the Most Out of Your Social Security Income wallst_recirc_link_tracking_init( "98037792762f26d3d75ff2", "graphic" ); All things considered, it is good to be retired today, at least as far as Social Security payments are concerned. For people who are 50 years old or younger, the future is not so bright financially. Sponsored: Tips for Investing A financial advisor can help you understand the advantages and disadvantages of investment properties. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now. Investing in real estate can diversify your portfolio. But expanding your horizons may add additional costs. If you’re an investor looking to minimize expenses, consider checking out online brokerages. They often offer low investment fees, helping you maximize your profit......»»

Category: blogSource: 247wallstAug 9th, 2022

A Democratic US Senate candidate in Missouri pledged to "stand up" to health insurers. Records show she personally invests in CVS Health, Humana, and UnitedHealth Group.

Trudy Busch Valentine and her husband have a net worth between $69.4 million and $219.4 million. If elected to the US Senate, she'd be among the wealthiest members. This July 12, 2019 file photo shows the UnitedHealthcare headquarters in Minneapolis.Jim Mone, File/AP Photo A Democratic US Senate candidate in Missouri has pledged to "stand up" to health insurers.  But the candidate, Trudy Busch Valentine, holds stock in CVS Health, Humana, and UnitedHealth Group. She has pledged to put her investments in a blind trust if elected.  In her bid to represent Missouri in the US Senate, Democrat Trudy Busch Valentine has pledged to "stand up insurance companies" on healthcare reform.  Yet the first-time political candidate holds stocks in large health insurance companies, according to a personal financial disclosure Valentine filed with the US Senate. They include investments in Humana; UnitedHealth Group, the world's largest insurer; and CVS Health, the parent company of Aetna. Taken together, the shares are valued between $768,008 and $1.7 million, according to an Insider analysis of the filings.Valentine's disclosure also indicates that, in 2021, she earned between $237,908 and $2.1 million in income from dividends and capital gains from the health insurance investments.Candidate reporting rules only require politicians to report their values of their stock holdings, dividends, and capital gains in broad ranges.Valentine is a former nurse and also a multi-millionaire. Her family owned a majority stake in Anheuser-Busch until 2008, when InBev bought the alcohol retailer for $52 billion.She holds stock in numerous other corporations, including tech giants Apple, Amazon, and Google, apparel company Nike, and Regeneron Pharmaceuticals, which made a COVID-19 treatment. She and and her husband have a net worth between $69.4 million and $219.4 million, according to her financial disclosure. If elected, she'd be one of the wealthiest members of Congress. She has pledged not to take a Senate salary if she wins the race. "Trudy has been very clear that she can't be bought, that she is running for public office as another form of service, and that expanding quality, affordable healthcare is one of her top priorities," Valentine campaign spokeswoman Elizabeth Markowitz told Insider in response to an inquiry about the disclosure.Valentine has said that if elected then she would place the assets of she and her husband, John Fries, into a blind trust, which is a formal arrangement, requiring congressional approval, in which a lawmaker officially transfers management of their financial assets to an independent trustee.Markowitz said the arrangement would help Missouri voters "trust that she is voting in their best interests" and that Valentine would start the process "immediately" after being elected. Dylan Hedtler-Gaudette, government affairs manager at the nonpartisan Project on Government Oversight, said the investments could "raise questions about how that person is going to operate as a member of Congress in terms of ethics and conflicts of interests." "The cleanest thing to do for anyone who is running for office, as a way to remove doubts about their decisions, is to clean up their portfolios as much as possible," such as investing only in index funds or completing the blind trust process before running for office.Even with a blind trust, he said, there can still be conflicts of interest because politicians already know which corporate stocks they hold. Congressional guidance says blind trusts provide the "most comprehensive approach" to avoiding "potential conflicts of interest or the appearance of such conflicts," but they can be expensive and time-consuming to establish, making them only accessible to wealthy lawmakers.Trudy Busch Valentine is running for the Democratic nomination for the US Senate race in Missouri.Courtesy Busch Valentine campaignCrowded race in MissouriValentine is one of the frontrunners in an 11-person race, alongside Marine veteran Lucas Kunce and businessman Spencer Toder. They'll face off in the August 2 primary for the seat that is being vacated by Republican Sen. Roy Blunt, who is retiring. The winner will likely face one of three Republicans: former Gov. Eric Greitens, Rep. Vicky Hartzler, or Missouri Attorney General Eric Schmitt. Rep. Billy Long and several other lesser-known candidates are also running.Valentine has said that watching her younger sister receive care after a severe spinal cord injury inspired her to go into the healthcare field. She later became a volunteer hospice nurse after her husband died of cancer in 2002. Two decades later, her son died from an opioid overdose. A post shared by Trudy Busch Valentine (@trudybuschvalentine)  She has pledged not to take funds from corporate political action committees.Insider's "Conflicted Congress" investigation published in December found dozens of lawmakers whose personal stock trades are discordant with their public responsibilities, such as members who craft anti-tobacco policy but invest in tobacco giants and others who receive plaudits from environmental groups for crafting policy aimed at combating the climate crisis — yet invest in fossil fuel companies."Conflicted Congress" also found numerous examples of conflicts of interest among federal lawmakers, both Democrats and Republicans. The 2012 federal Stop Trading on Congressional Knowledge Act, or STOCK Act, allows members of Congress and candidates for office to trade stocks so long as they quickly and publicly disclose the trades.But in recent months Congress has been debating whether to make the rules more strict — or to ban congressional stock trading altogether. Valentine has pledged to co-sponsor a ban for lawmakers and their immediate families.Her campaign said her stocks are managed by investment managers who have "complete discretion" over her stock purchases, adding that she does not "have daily oversight of those decisions." Valentine favors a 'public option'Valentine said during a candidate forum this month that she doesn't support a healthcare proposal known as "Medicare for All," which would abolish nearly all private health insurance in favor of placing everyone living in the US onto a government plan. At least eight other Senate candidates in Missouri said they supported the Medicare for All Act, which independent Sen. Bernie Sanders of Vermont has championed. Instead, Valentine favors an approach also endorsed by President Joe Biden during his White House campaign. Often called a "public option," the plan would create a government insurance option similar to Medicare that people could opt to have instead of private insurance. Health insurers oppose both a public option and the Medicare for All Act, instead favoring more funding toward Obamacare, formally known as the Affordable Care Acrt."Trudy supports universal access to quality, affordable healthcare," Markowitz said. "She believes that everyone should be able to afford to see a doctor. Trudy is open to a variety of proposals to get America to universal coverage." Read the original article on Business Insider.....»»

Category: dealsSource: nytJul 27th, 2022

AMERISERV FINANCIAL REPORTS INCREASED EARNINGS FOR THE SECOND QUARTER AND FIRST SIX MONTHS OF 2022

JOHNSTOWN, Pa., July 19, 2022 /PRNewswire/ -- AmeriServ Financial, Inc. (NASDAQ:ASRV) reported second quarter 2022 net income of $1,981,000, or $0.12 per diluted common share.  This earnings performance was a $273,000, or 16.0%, increase from the second quarter of 2021 when net income totaled $1,708,000, or $0.10 per diluted common share.  For the six-month period ended June 30, 2022, the Company reported net income of $4,399,000, or $0.26 per diluted common share.  This represents an 18.2% increase in earnings per share from the six-month period of 2021 when net income totaled $3,789,000, or $0.22 per diluted common share.  The following table highlights the Company's financial performance for both the three- and six-month periods ended June 30, 2022 and 2021: Second Quarter 2022 SecondQuarter 2021 Six Months Ended June 30, 2022 Six Months Ended June 30, 2021 Net income $ 1,981,000 $ 1,708,000 $ 4,399,000 $ 3,789,000 Diluted earnings per share $ 0.12 $ 0.10 $ 0.26 $ 0.22 Jeffrey A. Stopko, President and Chief Executive Officer, commented on the 2022 financial results: "AmeriServ Financial continued its positive earnings momentum in the second quarter of 2022 as we again posted increased earnings when compared to the 2021 results. The improved earnings performance in 2022 reflects the full benefit of several important strategic actions that our company executed in 2021 along with the successful management of our asset quality throughout the pandemic.  Specifically, I was pleased that we have been able to increase net interest income in 2022 despite a $1.3 million reduction in PPP loan related fee income in the first half of this year. Overall, AmeriServ Financial continues to benefit from our diversified revenue streams due to strong levels of loans, deposits, and fee income from our wealth management business." The Company's net interest income in the second quarter of 2022 increased by $257,000, or 2.6%, from the prior year's second quarter and, for the first six months of 2022, increased by $332,000, or 1.7%, when compared to the first six months of 2021.  The Company's net interest margin of 3.23% for the second quarter of 2022 and 3.19% for the six-month timeframe represents a 10 basis point improvement for the quarter and a 1 basis point improvement for the six-month period.  While the size of the Company's balance sheet remains high by historical standards, both total loans and total deposits have demonstrated stabilization since the second half of last year which corresponds with the conclusion of the government stimulus programs.  The Company's 2022 financial performance has been favorably impacted by the strategic actions taken by management in 2021 to lower funding costs.  The Company has also benefitted from the higher U.S. Treasury yield curve as interest rates have increased due to the Federal Reserve's action to tighten monetary policy in their effort to tame decades high inflation.   The higher national interest rates have favorably impacted the Company's financial performance, particularly net interest income in the second quarter of 2022 when compared to the first quarter of 2022.  Specifically, the higher interest rates caused total interest income to increase to a higher level than the corresponding increase in total interest expense.  In comparison to 2021, the termination of the Paycheck Protection Program (PPP) caused a reduced level of loan fee income and was the primary factor causing total interest income to decrease for both the second quarter and first six months of 2022 when compared to the same time periods from last year.  However, deposit and borrowing interest expense declined by more than the decrease in total interest income, resulting in net interest income improving in both time periods of 2022 compared to 2021.  Financial results also reflect the impact of continued strengthening of our asset quality, which enabled the Company to recognize a loan loss provision recovery during the second quarter of 2022 and for the six-month time frame.  Overall, the increase to net interest income, along with the loan loss provision recovery, more than offset a lower level of non-interest income and higher non-interest expense resulting in an improved earnings performance for the second quarter and first six months of 2022. Total average loans in the second quarter of 2022 are lower than the 2021 second quarter average by $14.5 million, or 1.5%, while total average loans for the first six months of 2022 were $8.4 million, or 0.9%, lower than the 2021 six-month level.  Improved loan pipelines have resulted in increased production during the second quarter of 2022, but a higher than typical level of payoff activity more than offset the new production causing total loan amounts to decrease since the end of the first quarter of 2022.  However, given the core loan growth experienced during 2021 and excluding PPP loans, total average loans in the second quarter of 2022 exceed the 2021 second quarter average by $41.3 million, or 4.4%, as growth of commercial real estate (CRE), residential mortgage and home equity loans more than offset a decrease in the level of commercial & industrial loans.  Total PPP loans averaged $4.7 million in the second quarter of 2022, representing a decrease of $55.8 million, or 92.2%, from the second quarter of last year.  Additionally, on an end of period basis, the total amount of PPP loans is only $2.2 million as we continue to work with our customers through the SBA forgiveness process.  Overall, despite the higher average volumes of CRE, residential mortgage and home equity loans, total loan interest income declined by $1.4 million, or 6.7%, for the first six months of 2022 when compared to the first six months of last year.  This decrease is primarily due to the Company recording a total of $376,000 of processing fees and interest income from PPP loans in the first half of 2022, which is $1.3 million, or 77.4%, lower than PPP income in the first half of 2021. Finally, on an end of period basis at June 30, 2022, excluding total PPP loans, the total loan portfolio is approximately $18.6 million, or 2.0%, higher from the June 30, 2021 level.  Total investment securities averaged $231.0 million for the first half of 2022 which is $29.6 million, or 14.7%, higher than the $201.4 million average for the first half of last year.  The increase in the U.S. Treasury yield curve has resulted in a more favorable market for securities purchasing activity so far in 2022.  The 2-year to 10-year portion of the yield curve increased by approximately 135 to 230 basis points since the beginning of the year, with shorter yields in that range increasing to a higher degree than the longer yields.  Overall, the higher rates resulted in yields for new federal agency mortgage-backed securities and federal agency bonds improving and exceeding the overall average yield of the existing securities portfolio.  Management purchased more of these investments and was able to redeploy the cash flow from the excess payoff activity from the loan portfolio and also more profitably utilize a portion of the increased liquidity on our balance sheet into the securities portfolio.  This redeployment of funds contributed to total securities growing between years.  Management also continued to purchase taxable municipals and corporate securities to maintain a well-diversified portfolio.   Overall, through the first six months of 2022, the average balance of total interest earning assets was $18.2 million, or 1.5%, higher than the first six-month average of 2021 while total interest income decreased by $1.1 million, or 4.5%, between years despite the increased average volume. Although reduced from its high levels when government stimulus initially impacted the economy, our liquidity position continues to be strong as total short-term investments averaged $37.6 million in the first half of 2022, which is $3.0 million, or 7.4%, lower than the 2021 six-month average.  Short-term investments averaged $28.7 million in the second quarter of 2022, which is lower than it has been trending over the past several quarters due to the additional investment in the securities portfolio.  In addition, uncertainty remains regarding the duration that the increased funds from government stimulus will remain on the balance sheet.  Diligent monitoring and management of our short-term investment position remains a priority.  Continued loan growth and prudent investment in securities are critical to achieve the best return on the Company's liquid funds with management expecting to continue to be active with new security purchases during the remainder of 2022 given the increase in interest rates. On the liability side of the balance sheet, through six months, total average deposits are $26.8 million, or 2.4%, higher compared to the first six months of 2021.  Total deposits have demonstrated stability over the past year as indicated by the second quarter 2022 average balance being only $2.0 million, or 0.2%, lower than the second quarter 2021 average balance.  Deposit volumes continue to reflect the favorable impact of government stimulus which provided support to many Americans and financial assistance to municipalities and school districts during the pandemic.  Deposit volumes were also favorably impacted by the Company's successful business development efforts and the Somerset County branch acquisition, which was completed in late May 2021.  Overall, the loan to deposit ratio averaged 84.0% in the second quarter of 2022, which indicates that the Company has ample capacity to continue to grow its loan portfolio and is strongly positioned to support our customers and our community during times of economic volatility.   Total interest expense for the first six months of 2022 decreased by $1.4 million, or 34.2%, when compared to the first six months of 2021, due to lower levels of both deposit and borrowing interest expense.  Deposit interest expense was lower by $956,000, or 35.3%, despite the higher year to date average volume of total deposits reflecting new deposit inflows as well as the loyalty of the bank's core deposit base.  Also, the late third quarter 2021 maturity of a large, high-cost institutional deposit, which was replaced by lower cost funds from the branch acquisition, resulted in significant interest expense savings.  The higher national interest rates this year did result in total deposit interest expense increasing between the first and second quarters of 2022 as certain deposit products tied to a market index repriced upward with the move in interest rates.  Specifically, our total deposit cost averaged 0.33% in the second quarter of 2022, which is 5 basis points higher than the first quarter of 2022; but still compares favorably to total deposit cost of 0.45% in the second quarter of 2021.  Overall, management believes that total deposit cost will continue to rise given the expectation of additional short-term interest rate increases by the Federal Reserve throughout 2022.  However, given the Company's strong liquidity position, along with that of the banking industry, we expect that future deposit rate increases will occur in a controlled manner.  Total borrowings interest expense decreased by $218,000 between the second quarter of 2022 and the same quarter of 2021 and by $428,000, or 31.9%, when comparing the first six months of 2022 to the first six months of 2021.  The decrease between years results from the favorable impact of the August 2021 subordinated debt offering which was used to replace higher cost debt.  This transaction effectively lowered debt cost on these long-term funds by nearly 4.0%.  This savings is recognized even though the size of the new subordinated debt is $7.0 million higher than the debt instruments it replaced.  The remaining portion of the favorable variance in borrowings interest expense between the first six months of 2022 and the first six months of 2021 is due to reduced interest expense from Federal Home Loan Bank (FHLB) borrowings.  The average balance of total short-term and FHLB borrowings is lower in the first half of 2022 by $15.9 million, or 28.7%, as strength of the Company's liquidity position allows management to let higher cost FHLB term advances mature and not be replaced.  The Company recorded a $325,000 loan loss provision recovery in the second quarter of 2022 as compared to a $100,000 provision expense recorded in the second quarter of 2021.  For the first six months of 2022, the Company recorded a $725,000 provision recovery compared to a $500,000 provision expense recorded in the first six months of 2021 resulting in a net favorable change of $1.2 million.  The 2022 provision recovery reflects improved credit quality for the overall portfolio due to several loan upgrades, a reduced loan portfolio size due to increased payoff activity including one substandard credit, and lower levels of criticized assets.  As demonstrated historically, the Company continues its strategic conviction that a strong allowance for loan losses is needed, which has proven to be essential given the support provided to certain borrowers as they fully recover from the COVID-19 pandemic.  Overall, we believe that non-performing assets remain well controlled totaling $3.2 million, or 0.34% of total loans, on June 30, 2022.  The Company continues to experience low net loan charge-offs, which were $105,000, or 0.02% of total average loans, in the first six months of 2022 and is relatively consistent with net loan charge-offs of $93,000, or 0.02% of total average loans, for the first six months of 2021.  Even though the Company recognized a loan loss provision recovery during the first half of the year, the balance in the allowance for loan losses at June 30, 2022 is only slightly lower than the balance of the allowance at June 30, 2021 by $184,000, or 1.6%.  The Company remains committed to prudently working with our borrowers that have been hardest hit by the pandemic by granting them loan payment modifications. On June 30, 2022, loans totaling approximately $5.2 million, or only 0.5% of total loans, were on a payment modification plan.  These loans include three commercial borrowers in the hospitality and personal care industries.  Management continues to carefully monitor asset quality with a particular focus on these customers that have requested payment deferrals. In summary, the allowance for loan losses provided 357% coverage of non-performing assets, and 1.20% of total loans, on June 30, 2022, compared to 373% coverage of non-performing assets, and 1.26% of total loans, on December 31, 2021.    Total non-interest income in the second quarter of 2022 decreased by $261,000, or 5.9%, from the prior year's second quarter and for the first six months of 2022 decreased by $540,000, or 6.0%, from the first six months of 2021.  Net realized gains on loans held for sale decreased by $87,000, or 71.3%, for the quarter and decreased by $487,000, or 78.9%, for the six months, due to the lower level of residential mortgage loan production which reflects a reduced level of mortgage loan refinance activity due to the quick escalation of interest rates since the beginning of 2022.  Residential mortgage loan production totaled $15.3 million in the first six months of 2022 and was 73.4% lower than the production level of $57.7 million achieved in the first half of 2021. The reduced level of mortgage loan production also caused mortgage related fees to decline by $67,000, or 67.7%, for the quarter and by $164,000, or 71.6%, for the six months.  Revenue from bank owned life insurance (BOLI) dropped by $110,000, or 20.0%, in the first half of 2022, after the Company received a death claim in 2021.  Wealth management fees increased by $247,000, or 4.2%, for the six-month time period of 2022 but declined by $46,000, or 1.5%, comparing the second quarter of 2022 to the second quarter of 2021.  The decrease in quarterly performance between years reflects the unfavorable impact of the declining equity markets on wealth management fee income which was partially offset by new customer business growth.  The fair market value of wealth management assets declined since the fourth quarter of 2021 by $339.9 million, or 12.5%, and totaled $2.4 billion at June 30, 2022.  Finally, service charges on deposit accounts increased by $110,000, or 25.9%, in the first six months of 2022 compared to the first six months of 2021, as consumers are more active this year, increasing their spending habits.        The Company has demonstrated good expense control as total non-interest expense in the second quarter of 2022 increased by $72,000, or 0.6%, when compared to the second quarter of 2021 and increased in the first half of 2022 by $246,000, or 1.1%, when compared to 2021.  Salaries & employee benefits increased by $96,000, or 1.4%, for the quarter and are $560,000, or 4.1%, higher for the six-month time period in 2022. Within total salaries & benefits expense, salaries costs are higher by $727,000, or 8.2%, through six months due to merit increases and a higher level of full-time equivalent employees.  Also, there were additional increases to health care costs and other employee benefits.  Partially offsetting these higher costs within salaries & benefits through six months was lower incentive compensation by $215,000, or 21.7%, due to the reduced level of loan production.  Similar to what occurred in 2021, the Company was required to recognize a settlement charge in connection with its defined benefit pension plan in the second quarter of 2022. The amount of the 2022 charge was $1,014,000 which is $163,000 higher than the $851,000 settlement charge recognized in the second quarter of 2021.  A settlement charge must be recognized when the total dollar amount of lump sum distributions paid from the pension plan to retired employees exceeds a threshold of expected annual service and interest costs in the current year.  So far in 2022, all but one employee that retired have elected to take a lump sum distribution as opposed to collecting future monthly annuity payments since the value of the lump sums continued to be elevated this year due to the low level where interest rates were late in 2021 when these lump sums were calculated.  It is anticipated that the Company will be required to recognize additional settlement charges through year end as more people retire.  However, it is important to note that since the retired employees have chosen to take the lump sum payments, these individuals are no longer included in the pension plan.  Therefore, we expect that the Company's normal annual pension expense should be lower in the future, which has been evident so far in 2022 as the normal amount of pension expense required to be recognized is lower than the 2021 level.  Professional fees were $124,000, or 4.6%, higher for the first six months of 2022 due primarily to higher legal costs within our wealth management group.  Net occupancy expenses are $109,000, or 8.2%, higher through six months of 2022 due to increased utilities cost along with maintenance & repair expense which was primarily related to the new branch office.  Partially offsetting these higher costs were other expenses decreasing by $531,000, or 12.1%, for the first six months of 2022 when compared to the same time period from last year.  Contributing to the lower level of other expense was no additional costs related to a branch acquisition in 2022 after $303,000 of expense was recognized for this purpose in 2021.  Other expenses were also favorably impacted by a $149,000 credit for the unfunded commitment reserve after $56,000 of expense was recognized in the first half of last year, resulting in a $205,000 favorable shift. The Company recorded an income tax expense of $496,000, or an effective tax rate of 20.0%, in the second quarter of 2022.  This compares to an income tax expense of $420,000, or an effective tax rate of 19.7%, for the second quarter of 2021.  Similarly, for the first six months of 2022, the Company recorded income tax expense of $1.1 million, or an effective tax rate of 20.0%, compared to income tax expense of $940,000 in 2021, or an effective tax rate of 19.9%.    The Company had total assets of $1.3 billion, shareholders' equity of $106.4 million, a book value of $6.22 per common share and a tangible book value(1) of $5.41 per common share on June 30, 2022.  The decline in the Company's book value and tangible book value per share in 2022 reflects a decrease in the value of the Company's available for sale investment securities due to higher interest rates and the negative impact of a revaluation of the net pension liability resulting from a drop in the value of the pension plan assets. The Company continued to maintain strong capital ratios that exceed the regulatory defined well capitalized status. Forward-Looking Statements This press release contains forward-looking statements as defined in the Securities Exchange Act of 1934 and is subject to the safe harbors created therein. Such statements are not historical facts and include expressions about management's confidence and strategies and management's current views and expectations about new and existing programs and products, relationships, opportunities, technology, market conditions, dividend program, and future payment obligations. These statements may be identified by such forward-looking terminology as "continuing," "expect," "look," "believe," "anticipate," "may," "will," "should," "projects," "strategy," or similar statements. Actual results may differ materially from such forward-looking statements, and no reliance should be placed on any forward-looking statement. Factors that may cause results to differ materially from such forward-looking statements include, but are not limited to, unanticipated changes in the financial markets, the level of inflation, and the direction of interest rates; volatility in earnings due to certain financial assets and liabilities held at fair value; competition levels; loan and investment prepayments differing from our assumptions; insufficient allowance for credit losses; a higher level of loan charge-offs and delinquencies than anticipated; material adverse changes in our operations or earnings; a decline in the economy in our market areas; changes in relationships with major customers; changes in effective income tax rates; higher or lower cash flow levels than anticipated; inability to hire or retain qualified employees; a decline in the levels of deposits or loss of alternate funding sources; a decrease in loan origination volume or an inability to close loans currently in the pipeline; changes in laws and regulations; adoption, interpretation and implementation of accounting pronouncements; operational risks, including the risk of fraud by employees, customers or outsiders; unanticipated effects of our banking platform; risks and uncertainties relating to the duration of the COVID-19 pandemic, and actions that may be taken by governmental authorities to contain the pandemic or to treat its impact; and the inability to successfully implement or expand new lines of business or new products and services.  These forward-looking statements involve risks and uncertainties that could cause AmeriServ's results to differ materially from management's current expectations. Such risks and uncertainties are detailed in AmeriServ's filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2021. Forward-looking statements are based on the beliefs and assumptions of AmeriServ's management and on currently available information. The statements in this press release are made as of the date of this press release, even if subsequently made available by AmeriServ on its website or otherwise. AmeriServ undertakes no responsibility to publicly update or revise any forward-looking statement. _____________________________ (1)   Non-GAAP Financial Information.  See "Reconciliation of Non-GAAP Financial Measures" at end of release.   AMERISERV FINANCIAL, INC. NASDAQ: ASRV SUPPLEMENTAL FINANCIAL PERFORMANCE DATA June 30, 2022 (Dollars in thousands, except per share and ratio data) (Unaudited) 2022 1QTR 2QTR YEAR TO DATE PERFORMANCE DATA FOR THE PERIOD: Net income $ 2,418 $ 1,981 $ 4,399 PERFORMANCE PERCENTAGES (annualized): Return on average assets 0.73 % 0.59 % 0.66 % Return on average equity 8.48 7.10 7.80 Return on average tangible common equity (B) 9.62 8.10 8.87 Net interest margin 3.14 3.23 3.19 Net charge-offs (recoveries) as a percentage of average loans 0.03 0.01 0.02 Loan loss provision (credit) as a percentage of average loans (0.17) (0.13) (0.15) Efficiency ratio (D) 81.38 84.89 83.14 EARNINGS PER COMMON SHARE: Basic $ 0.14 $ 0.12 $ 0.26 Average number of common shares outstanding 17,094 17,109 17,102 Diluted 0.14 0.12 0.26 Average number of common shares outstanding 17,146 17,149 17,148 Cash dividends paid per share $ 0.025 $ 0.030 $ 0.055   2021 1QTR 2QTR YEAR TODATE PERFORMANCE DATA FOR THE PERIOD: Net income $ 2,081 $ 1,708 $ 3,789 PERFORMANCE PERCENTAGES (annualized): Return on average assets 0.65 % 0.51 % 0.58 % Return on average equity 8.04 6.46 7.24 Return on average tangible common equity (B) 9.08 7.30 8.18 Net interest margin 3.23 3.13 3.18 Net charge-offs (recoveries) as a percentage of average loans 0.05 (0.01) 0.02 Loan loss provision (credit) as a percentage of average loans 0.17 0.04 0.10 Efficiency ratio (D) 79.00 84.35 81.67 EARNINGS PER COMMON SHARE: Basic $ 0.12 $ 0.10 $ 0.22 Average number of common shares outstanding 17,064 17,073 17,068 Diluted 0.12 0.10 0.22 Average number of common shares outstanding 17,101 17,131 17,114 Cash dividends paid per share $ 0.025 $ 0.025 $ 0.050   AMERISERV FINANCIAL, INC. NASDAQ: ASRV --CONTINUED-- (Dollars in thousands, except per share, statistical, and ratio data) (Unaudited) 2022 1QTR 2QTR.....»»

Category: earningsSource: benzingaJul 19th, 2022

11 Of The Easiest Ways To Protect Your Retirement Money

It’s no secret that it’s hard to plan for retirement. ‌In addition to growing a sizeable nest egg, you must protect it from ‌external factors like market‌ ‌volatility, inflation,‌ ‌and unforeseen expenses. And, to be brutally honest, that’s been tough as of late. Northwestern Mutual’s 2022 Planning & Progress Study shows that personal savings are […] It’s no secret that it’s hard to plan for retirement. ‌In addition to growing a sizeable nest egg, you must protect it from ‌external factors like market‌ ‌volatility, inflation,‌ ‌and unforeseen expenses. And, to be brutally honest, that’s been tough as of late. Northwestern Mutual’s 2022 Planning & Progress Study shows that personal savings are down 15% from $73,100 in 2021 to $62,086 in 2022. Moreover, 60% of American adults say the pandemic is “highly disruptive” ‌to their‌ ‌finances. .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Ray Dalio Series in PDF Get the entire 10-part series on Ray Dalio in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q1 2022 hedge fund letters, conferences and more In the midst of the pandemic, though, Americans saved around $2.5 trillion. Unfortunately, those cash reserves are drying up as people use them to deal with 40-year-high inflation. ‌According‌ ‌to‌ ‌a‌ ‌Forbes‌ Advisor ‌survey, two-thirds of Americans are raiding their savings because goods and services are so darn expensive. That said, planning to retire comfortably means securing your savings and assets. While that can be overwhelming initially, here are the 10 easiest ways to protect your retirement money. 1. Develop a financial forecast for retirement. Calculating how much cash you’ll need for each year of retirement can help you save a bigger-than-expected nest egg. “Nowadays, if you retire at 65, you should have a financial plan for 20 years,” Tenpao Lee, a professor of economics at Niagara University in New York, told U.S. News. Because your funds will need to last through these decades, you may want to consider 401(k) and IRA withdrawals as your new paycheck. ‌Those amounts, plus your Social Security benefits, can cover your daily‌ ‌expenses. Developing a retirement budget can prevent you from overspending, ‌incurring‌ ‌debt, or exhausting‌ ‌your‌ ‌savings. 2. Make use of your retirement savings to bridge the Social Security gap. “Use your retirement savings to fund a Social Security bridge strategy, advises Steve Vernon, president of Rest-of-Life Communications. “Doing so can significantly increase the amount of Social Security income you’ll receive over your lifetime by enabling you to delay the start of your benefits as long as you can.” ‌However, delaying further than 70 doesn’t offer any benefits. You can also bolster your retirement income with a Social Security bridge plan. How? ‌Vernon explains that you can convert easily accessible savings –a target for fraudsters- into a guaranteed income stream from the government. 3. Diversify your retirement portfolio. As the adage goes, don’t put all your eggs in one basket. Make sure you’re spreading your investments out between stocks and bonds. ‌You should also take your risk tolerance into account when choosing your investments. More specifically, your retirement portfolio should contain high-yielding bonds and dividend-paying stocks. It is generally recommended that your investments should become less risky the closer you get to retirement. ‌You can spread out the risk by investing in different things, which will give you a more stable allocation of your ‌assets. Also, look for other ways to make money besides bonds and stocks. ‌Many people seek additional income streams and new opportunities even in retirement. Examples include freelancing, working from home, and passive income sources like rental properties. 4. Choose your asset mix carefully. “It’s essential to think about your asset mix, which simply means the different types of investments that go into your portfolio,” recommends Jordan Bishop in a previous Due article. “For example, investing in stocks may help you grow your retirement fund faster, but if they drop substantially, you could also see plenty of losses.” That’s why you’ve got to choose your assets carefully. ‌Also, ensure that your portfolio includes a combination of investments. How can you choose the right assets? First, invest in stocks when you’re young. “When deciding how to allocate your funds, a general rule of thumb is that the younger you are, the more you can invest in stocks,” adds Jordan. ‌Since stocks offer much higher returns than other assets, they have always tended to rise in value. But, if there are any losses, you have time to recoup. Secondly, choose safer investments as you get older. “Investing in low-cost index funds will provide you with an average return without taking on too much risk,” Jordan states. “But if you really want to reduce risk as much as possible, investing in bonds or bond funds rather than stocks or stock funds is the way to go.” 5. Keep some cash on hand. Almost all financial planners say you should hold on to at least some stocks in order to avoid outliving your assets. ‌However, retirees need to be more careful with their investments. ‌Unlike younger investors, they don’t have long time horizons. Professionals say you should keep five years’ worth of expenses in cash as a safeguard. Lucky, those with that kind of cash have had enough extra to work toward a  goal like that. Alternatively, you may use‌ ‌cash‌ ‌equivalents,‌ ‌such‌ ‌as‌ ‌short-term‌ ‌bonds, certificates‌ ‌of‌ ‌deposit,‌ ‌and‌ ‌Treasury‌ ‌bills. You should be able to keep most of your expenses stable once you retire. But that doesn’t mean you’re free from the unexpected. For example, how would you cover a home repair or medical emergency? Working overtime is no longer an option. So, will you use a credit card or tap into your savings? Moreover, if market conditions temporarily cause your investments to fall, you should not withdraw money from them. If‌ ‌you’re ‌worried‌ ‌that‌ ‌inflation will grow and erode your purchasing power, consider holding some “cash equivalents.” ‌These typically take the form of Treasury Inflation-Protected Securities. TIPs have a fixed interest rate, but their par value increases with changes in the‌ ‌Consumer‌ ‌Price‌ ‌Index. ‌In other words, if inflation hits 5%, your investment will grow too. ‌With a TIPS, the inflation adjustment component keeps the principal’s purchasing power ‌intact. ‌However, you’ll lose inflation adjustment money if we enter a period of deflation after buying TIPS. 6. Prepare yourself for inflation. Speaking‌ ‌of‌ ‌inflation,‌ ‌the cost of living rose by the most in 4 decades in 2022. And, suffice to say, a lot of us are struggling. “Nearly half of Americans (45%) polled by Gallup last year admitted inflation caused financial hardship at a time when the CPI was just 6.8%,” writes Pierre Raymond in a Due article. “Moreover, of those that reported facing difficulties, 10% revealed their challenges impacted their standard of living.” “While the Federal Reserve claims inflation’s bubble will pop soon, experts anticipate the CPI won’t fall below 4% by the year’s end,” he adds. “That means you can expect another year of high inflation bumping up prices.” Updating your budget with inflation in mind. There is, however, a silver lining. You can use the following techniques to stop inflation from deflating your savings. Make a list of priorities. ‌This shows the bare minimum you need every‌ ‌month‌ ‌to‌ ‌cover‌ ‌your‌ ‌essentials. ‌It’s a good reminder of what you need to pay first. Cut discretionary expenses. Whatever items didn’t make it on your list of priorities should be placed on the chopping block. Automate savings. Ideally, you want to have 3 to 6 months of expenses in your emergency fund. Tweak your phone and internet package. ‌Consider downsizing your unlimited plan to a ‌plan‌ ‌with‌ ‌strict‌ ‌data and‌ ‌talk‌ ‌limits. Update your insurance. Compare plans or negotiate a better rate with your current provider. Eat better for less. ‌Plan your meals based on‌ ‌weekly‌ ‌flyers‌ ‌and‌ ‌coupons. Use less energy. You can reduce energy consumption by keeping your AC at 78°F when you’re at home. During the winter, keep the heat at 68°F while you’re at home. Reduce your fueling costs. Consider downloading an app like GasBuddy or carpooling. Learn how to negotiate. Contact your credit card company to negotiate a more favorable interest rate. Investigate financial assistance. Contact a free credit counseling organization for financial advice. 7. Don’t overlook healthcare and long-term expenses. According to a Fidelity Retiree Health Care Cost Estimate in 2022, a retired couple would need around $315,000 saved (after tax) to cover health care expenses in retirement. ‌However, with people more likely to live longer, they will need‌ ‌to‌ ‌pay‌ even ‌more‌ ‌down the road. So, keep that in mind when constructing your retirement plan. And, to make matters worse, this figure ‌does not include long-term care (LTC) costs. ‌You might want to set aside a separate fund for long-term care costs to secure your retirement income. Additionally, you should consider long-term care insurance. ‌This‌ ‌could help protect seniors over 65 who may suffer from disabilities, chronic conditions, need nursing care, and home health care. Also, if you have an annuity, ensure you attach a long-term care rider to cover these expenses. There are also stand-alone LTC annuities if you’re interested. 8. Have a plan for taxes. Individuals don’t always understand how taxes can impact‌ ‌their retirement‌ ‌savings‌ ‌and‌ ‌assets. ‌Capital gains, inheritances, and estate taxes can heavily reduce your retirement fund. In turn, this reduces your savings. That’s why, when planning for retirement, consider all the taxes that your savings, assets, and income may be subject to today and tomorrow. ‌Consulting a financial advisor for direction is also strongly recommended. 9. Rethink target-date funds. Target date funds provide an investment mix of stocks, bonds, and cash based on the age you plan to retire. ‌As you approach retirement, the fund will automatically adjust its mix to become more conservative. However, some people use them wrong, says Mike Gray, a CAPTRUST financial advisor. Suppose they plan to retire in 2045. ‌Instead of purchasing a fund for the year, they put a little bit of money into a fund for the year 2030. Why? ‌They‌ ‌think‌ ‌that’ll be safer. ‌Following that, they put some money in a 2060 target-date fund, which is‌ ‌more‌ ‌aggressive. “The combination of those choices may not be as effective as choosing the single right target-date fund. So you need to put it in one fund based on your planned retirement age and stick with it,” he says. But, that’s not the only problem with target-date funds. One-size will never fit all. The one-size-fits-all approach, relying simply on a date, can cause inappropriate asset allocation. The funds invest in themselves. ‌Most target-date funds invest mainly‌ ‌in‌ ‌other‌ ‌funds‌ ‌managed‌ ‌by‌ ‌the‌ ‌same‌ ‌company. Ignoring the conflict of interest, for now, limiting investment options can hurt‌ ‌returns. Fees. ‌Because‌ ‌they invest in other funds, target-date funds charge multiple ‌fees. Most investors can do better. ‌But, unfortunately, despite target-date funds’ good premise – growing wealth during the first years of a career and protecting it later – for many investors, they won’t deliver on their‌ ‌promise. 10. Avoid excessive withdrawals. Your retirement income can be at risk if you spend your funds too fast. ‌As such, it is prudent to withdraw your funds slowly toward the end of your working life. ‌‌‌Furthermore, it’s essential to know that 401(k)s, traditional IRAs, and even Roth IRAs have different rules, taxes, and withdrawal rates. These rates and taxes can severely eat away at your retirement ‌savings if you don’t take measures to minimize them. ‌Because of that, it’s a good idea to be mindful of them and plan withdrawals accordingly. ‌ In short, you may derail your retirement planning if you withdraw too much from your retirement account. 11. Buy an annuity. When facing an income-expense gap, consider an annuity. ‌Annuities‌ ‌provide lifelong guaranteed income. ‌You can therefore manage your money throughout retirement more effectively. When you buy an annuity, you sign a contract with an insurance company. This company assumes the risk of a series of payments over the years in return for a lump-sum investment. However, some annuities can be purchased over a series of payments. Although you can specify an exact timeframe — like for 20 years — you’ll receive monthly payments ‌for‌ ‌the‌ ‌rest‌ ‌of‌ ‌your‌ ‌life. With a fixed annuity, you’ll also know what you’ll be getting. For instance, with Due, you get 3% on your money — no matter what. At the same time, it’s often suggested that you wait on an annuity until you’ve maxed out your other retirement accounts. Frequently Asked Questions How much money do I need to retire? There are several factors that determine the amount you need. ‌It depends on your age at retirement, how long you live, and how much money‌ ‌you‌ ‌get‌ ‌from‌ ‌pensions‌ ‌or‌ ‌Social Security. ‌If‌ ‌your spending needs are more than your retirement income, you’ll have to take withdrawals from your retirement fund to fill the gap. The most important factors are how much you’re withdrawing,‌ ‌for‌ ‌how long,‌ ‌and‌ ‌any‌ ‌earnings‌ ‌or‌ ‌losses‌ ‌on‌ ‌your‌ ‌savings. How much can I contribute to a retirement account? Contribution limits for retirement accounts are often increased annually. ‌For example, a person’s contribution limit to a qualified individual retirement account (IRA) in 2022 will be $6,000 ($7,000 if you are ‌50‌ ‌or‌ ‌older). ‌Individuals can contribute up to $20,500 to a traditional 401(k) in 2022. ‌People over 50 can make a catch-up contribution of $6,500 per year — making their total ‌$27,000. There are no contributions with annuities. What‌ ‌happens if I take money out of my retirement account early? When it comes to retirement accounts, you can’t withdraw money until you’re age ‌59‌ ½. The early withdrawal penalty is 10%, ‌plus‌ ‌any‌ ‌taxes‌ ‌due. Are there taxes on retirement account withdrawals? In most cases,‌ ‌yes. Taxes are deferred on IRAs and 401(k)s. ‌This means you put money into the account before taxes and could deduct it in the year you funded it. ‌Therefore, you’ll be taxed on withdrawals in retirement at your current ‌tax‌ ‌rate. ‌On the other hand, Roth IRAs are tax-free because they’re funded with after-tax money. What is the best way to‌ ‌invest‌ ‌my‌ ‌retirement‌ ‌savings? It’s crucial to avoid significant losses in your early retirement years (and years leading up to it). If you withdraw money with a low balance, you’ll run out of money sooner than expected. But that doesn’t mean you shouldn’t risk it at all. Your retirement will hopefully last a long time. ‌However, prices will rise over time, and your account balances may need to grow to keep up with inflation and fund a lifetime of income. ‌Unfortunately, you might not produce enough if you put your money into low-yielding safe investments. It’s hard to find that balance. ‌And‌ ‌it’s easy to get fooled by too-good-to-be-true investments. ‌But on the other hand, many people can fund a comfortable retirement with a diversified mix of low-cost mutual funds or exchange-traded funds. ‌ Ultimately, you must figure out how to spread your money among these investments. And depends on your risk tolerance and financial situation. Article by John Rampton, Due About the Author John Rampton is an entrepreneur and connector. When he was 23 years old while attending the University of Utah he was hurt in a construction accident. His leg was snapped in half. He was told by 13 doctors he would never walk again. Over the next 12 months he had several surgeries, stem cell injections and learned how to walk again. During this time he studied and mastered how to make money work for you, not against you. He has since taught thousands through books, courses and written over 5000 articles online about finance, entrepreneurship and productivity. He has been recognized as the Top Online Influencers in the World by Entrepreneur Magazine and Finance Expert by Time . He is the Founder and CEO of Due. Updated on Jul 5, 2022, 4:01 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkJul 5th, 2022

Best Retirement Plans – Broken Down By Rankings

11, There was a time when workers could depend on an employee pension plan and Social Security to cover their retirement expenses. ‌Nowadays, pensions are ‌scarce. And, the future of Social Security is murky at best. Maybe this is why one in four Americans haven’t saved anything for retirement. And, those that did, aren’t saving […] 11, There was a time when workers could depend on an employee pension plan and Social Security to cover their retirement expenses. ‌Nowadays, pensions are ‌scarce. And, the future of Social Security is murky at best. Maybe this is why one in four Americans haven’t saved anything for retirement. And, those that did, aren’t saving enough. But, it doesn’t have to be this way. We’ve got all the information you need about the best retirement plans and how to choose the right plan. .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Ray Dalio Series in PDF Get the entire 10-part series on Ray Dalio in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q1 2022 hedge fund letters, conferences and more An Overview of Retirement Plans When it comes to funding your golden years, you have three main choices. 401(k)s and similar retirement plans. Your employer might offer you free money if you contribute enough to qualify for a‌ ‌match. ‌401(k)s, 403(b)s, 457(b)s, defined benefit plans, and TSPs are some examples of employer-sponsored retirement plans. If you have maxed out your 401(k) at work or don’t have one‌ ‌at‌ ‌work. IRAs can be a viable option. You own a small business or are self-employed. Among the retirement accounts available to you are the SEP IRA, Solo 401(k), SIMPLE IRA, and profit-sharing accounts. We will further breakdown and rank your retirement plan options. ‌Depending on your financial situation, this may help you decide which option is right for you. However, you should always talk to a financial advisor about any retirement plan. Employer-Sponsored Retirement Plans 401(k)s and other defined contribution (DC) plans have all but taken over the retirement market since their introduction in the early 1980s. ‌In addition, the employer-sponsored retirement plan is probably your most valuable job benefit. The 2019 Employee Benefit Trends Study from MetLife found that 60% of respondents said retirement plans were a “must-have” when evaluating‌ ‌a‌ ‌prospective employer. You should definitely opt-in if your employer offers a retirement savings plan. They can really help you make a big difference. ‌Depending on where you work, though, your retirement options may differ. Traditional 401(k). 401(k)s are the most common employers’ retirement plans. ‌Every payday, your employer deducts money from your account and invests it for you. ‌If you leave your job, your 401(k) funds remain in your account. Or, you can roll them over into a new account. Under 401(k) plans, you may be able to make pre-tax contributions. ‌Since they grow tax-deferred, invested funds and earnings aren’t taxed until you withdraw them in retirement. To motivate employees to enroll in 401(k) plans, an employer may match a portion of their contributions. For 2021 and 2022, the maximum 401(k) contribution is $19,500. If you’re 50 or older, you can contribute another $6,500. ‌There is usually a penalty if you withdraw funds from a 401(k) before the age of 59 1/2. Roth 401(k). It’s not uncommon for Roth options to be part of many 401(k) plans. ‌These plans don’t require pre-tax contributions–they’re after-tax. ‌When you withdraw in retirement, you don’t pay taxes on it. Roth 401(k)s and traditional 401(k)s have the same contribution limits. ‌If your employer matches Roth 401(k) contributions, you still get the match. ‌According to federal regulations, it’ll go into your traditional 401(k). Determining when you expect your taxes to be lower is the key to choosing between a Roth and traditional 401(k). ‌If you make contributions to a 401(k) now, or if you withdraw money from it in retirement years from now. Contributing to a traditional 401(k) account can lower your retirement taxes if your income taxes are higher today. ‌For now, a Roth 401(k) account is a better choice if you think you are in a lower tax bracket than you will be in retirement. One more thing. ‌A 401(k) plan, wheter traditional or Roth, offered by your employer can’t require more than a year of service to participate. And the minimum age to participate cannot exceed 21. 403(b) plans. 403(b) plans work similarly to 401(k) plans. ‌But‌ ‌it’s‌ ‌limited to ministers, public school employees, and nonprofit employees. Other than who can use a 403(b), employees who have worked for their employer for at least 15 years will be able to contribute an extra $3,000 ‌per‌ ‌year‌ ‌to‌ ‌a‌ ‌403(b). In‌ ‌2022,‌ ‌the‌ ‌contribution‌ ‌limit‌ ‌for‌ ‌403(b)‌ ‌accounts‌ is $20,500, or 100% of your compensation, whichever is lower. ‌You can make catch-up contributions if you are over 50 ‌and‌ ‌contribute‌ ‌an‌ ‌additional‌ ‌$6,500‌ ‌per‌ ‌year. Retirement withdrawals are generally treated as regular income. When you’re under 59 1/2, you’re subject to taxes and penalties for withdrawals. 457(b) plans. Some nonprofit employees and employees of state and local governments can enroll in 457 plans. ‌Their contribution limits resemble those of 401(k)s and 403(b)s. But in their final three years before retirement, they allow catch-up contributions of up to $39,000. These accounts are less likely to offer employer matching contributions — and taking an emergency withdrawal is tough. Taxes are deferred on the account. ‌Again,‌ ‌you won’t owe taxes on contributions or earnings until you begin taking‌ ‌withdrawals‌ ‌in‌ ‌retirement. Several 457(b) plans permit Roth accounts, which are similar to‌ ‌Roth‌ ‌401(k)s. IRAs In the U.S., an individual retirement account (IRA) is a valuable way to ‌save‌ ‌for‌ ‌retirement. ‌Contributions to an account in 2022 can be up to $6,000 for individuals, and up to $7,000 for workers over the age of 50. IRAs come in many varieties, such as the traditional IRA, Roth IRA, spousal IRA, rollover IRA, SEP IRA,‌ ‌and‌ ‌SIMPLE‌ ‌IRA. ‌Here are the characteristics and differences of each. Traditional IRA. You are probably most familiar with the traditional IRA. ‌It‌’s comparable to‌ ‌a traditional‌ ‌401(k). The differences? ‌It‌ ‌has lower contribution limits, phase-out deductions as your income rises, and provides free choice in retirement‌ ‌funds. Contributions are pre-tax, just like in a traditional 401(k). ‌Until the payouts begin between the ages of 59.5 and 72, the funds grow and gain interest without triggering tax liabilities. ‌The amount of taxes you have to pay at that age is likely to be lower as well because your income is likely to be lower. IRA contributions will be capped at $6,000 per year in 2021 and 2022. ‌You can contribute up to $7,000 per year if you are 50 or older. Generally,‌ ‌a‌ ‌traditional‌ ‌IRA‌ ‌is‌ ‌one‌ ‌of‌ ‌the‌ ‌best‌ ‌retirement‌ ‌plans‌ ‌arvailable. ‌‌A match-matching 401(k) plan is somewhat better, however. ‌Alternatively, if your employer does not offer a defined contribution plan, you may contribute to a traditional IRA. Be aware, though, that the tax deduction for contributions is not available to you if you earn more than $100,000. Roth IRA. IRAs also have Roth versions, just as 401(k) plans do. ‌There are, however, some special provisions for IRAs. Savings are made after-tax in Roth 401(k)s. ‌The individual pays taxes on his or her income, then puts the money into a‌ ‌Roth‌ ‌IRA. ‌Distributions are tax-free after the money accumulates in the Roth IRA. People who expect to have a higher income after retirement than they do now are likely to benefit from Roth plans. Roth‌ ‌IRAs‌ ‌also‌ ‌retain the contribution limit of a traditional IRA. Additional conditions apply, however. ‌The first disadvantage of Roth IRAs is that they aren’t available to high-earners. ‌Those who make over $140,000 a year, or $208,000 for a couple, are not eligible to‌ ‌contribute‌ ‌to‌ ‌a‌ ‌Roth‌ ‌IRA. However, once you’ve opened a Roth IRA, you can keep the money in it. ‌Contrary to traditional 401(k)s and IRAs, Roth IRAs don’t have to be tapped by the age of 72. As such, the government can get a piece. Additionally, Roth IRAs can only be funded with earned income. ‌It cannot hold rental income, dividends, capital gains, or interest from loans. It has to be money that you’ve made through work. SEP IRA. 401(k)s are complex and expensive, which is one of their big drawbacks. It’s not a requirement that businesses offer 401(k) plans, but some small firms may be unable to afford them if they don’t. A big disadvantage of an IRA is the low contribution limit. ‌If you have a retirement fund, you may wish to contribute more than the maximum of $6,000 or $7,000 ‌. These two problems can be solved by a SEP IRA, or Simplified Employee Pension IRA. It‌ ‌combines some of the features of an IRA and a 401(k). ‌Employees have some control over investments, and contributions are relatively high with the result of an employer-sponsored retirement fund. In 2022, the contribution limit is‌ ‌25‌ ‌percent‌ ‌of‌ ‌compensation‌ ‌or‌ ‌$61,000,‌ ‌whichever‌ ‌is‌ ‌less. ‌In the case of self-employed individuals, calculating contribution limits is more challenging. Employers play a key role in SEP IRAs, which are different from‌ ‌other‌ ‌IRAs. You can set up a SEP IRA as a sole proprietor, partnership, or corporation. ‌Employees can contribute to their retirement fund from their pre-tax earnings, which allows them to give them a retirement fund. ‌Traditional IRAs and SEP IRAs offer the same tax deferrals. Additional IRA plans. While the three plans listed above are the most common types of IRAs there are even more IRA options. Simple IRA. Small businesses with fewer than 100 employees can take advantage of the Savings Incentive Match Plan for Employees (SIMPLE) IRA. ‌In 2021, you may contribute up to $13,500 ‌($14,500‌ ‌in‌ ‌2022). ‌In addition to the 3% matching contribution, employers can choose to make a 2% nonelective contribution to their employees’ SIMPLE IRAs. Spousal IRA. Employees with earned income are typically eligible for IRAs. ‌Spousal IRAs allow spouses of workers with earned income to contribute to IRAs‌ ‌as‌ ‌well. The spouse who is working must have a taxable income that exceeds that contributed to any IRAs, and the spousal IRA can be either a traditional or ‌Roth‌ ‌IRA. Rollver IRA. Rollover IRAs happen when you move a retirement account from one IRA to another. ‌Money is transferred from one account to the rollover IRA tax-free. ‌Traditional or Roth IRAs can be rolled over at any institution that allows them. ‌And, there’s no limit to how much you can transfer. Payroll deduction IRA. It’s easy to set up payroll deduction IRAs for business owners. ‌Employees can open IRAs at financial institutions of their choosing, and payroll deductions fund those‌ ‌IRAs. If you’re a small business owner, you can only contribute to employees’ IRAs. Solo 401(k) Plan “As you might have surmised, a solo 401(k) is a retirement plan designed, well, for individuals,” explains Due founder John Rampton. “Specifically, business owners who only employee me, myself, and I.” “Sole proprietors, independent contractors, and freelancers all quality — just as long as they don’t employ anyone else,” he adds. “And, don’t try to pull a quick one on the IRS as they are very strict about this requirement.” The following caveats apply, however. First, if you’re‌ ‌married. ‌In this case, you’re both ‌covered. A second example is if you have a day job and a side hustle. “You may be able to contribute to both,” John says. “However, to play it safe, double-check with a tax professional.” “And, in case you’re curious, there are no age or income restrictions when it comes to a solo 401(k).” You can contribute up to $61,000 in 2022 or $67,500 if you’re 50 or older because you can contribute as both an ‌employee‌ ‌and‌ ‌employer. ‌ In short, anyone can open a solo 401(k). And it can be a traditional or Roth account. Fixed Annuities In a similar manner to a pension plan, a fixed annuity can provide guaranteed and lifetime payments. In fact, 9 in 10 investors, according to the Protected Retirement Income and Planning Study conducted by ALI and CANNEX, ‌would prefer a retirement income plan that guarantees an income or protects the principal. Compared to some other annuity contracts, like indexed or variable annuities, fixed annuities are easier to understand and compare. ‌For instance, with a Fixed Annuity, you can get 3% a month on your money. A fixed annuity typically has predictable benefits and is tax-deferred. It can also provide a death benefit to your beneficiaries. And, as an annuity is not subject to IRS contribution limits. As such, you can invest whatever amount you want for your retirement. Moreover, fixed annuities are among‌ ‌the‌ ‌safest‌ ‌and‌ ‌most secure‌ ‌investments. Moreover, state insurance departments heavily regulate them. Because of that, they’re not affected by market changes. It’s usually possible to access 10% of your annuity’s cash value each year without any penalties if you’re over 59 1/2. But, there are some disadvantages to be be aware: A fixed annuity provides‌ ‌retirement‌ ‌savings. ‌Therefore, the IRS imposes a 10% penalty on gains withdrawn from fixed annuities for those under 59 ½. The ordinary income tax applies to withdrawals and payouts. Fixed annuities may not keep up with inflation. A fixed annuity is not always the best retirement income option. ‌They’re usually used to build wealth. ‌You should get a variable annuity if you want to turn your assets into income. The FDIC doesn’t insure fixed annuities. However, they’re backed by state-regulated insurers. Old School Pensions Some large companies, the military, and the government may offer pension plans, states the SoFi team. ‌As more employees take responsibility for their retirement, these are becoming less common. ‌In fact, as of 2019, only 14% of Fortune 500 companies offered defined-benefit plans to new hires, according to a study released by Willis Towers Watson. This is down from 59% ‌in‌ ‌1998. Despite their rarity, they still do exist. So, they are worth noting. Pension plans generally fall into two broad categories: Defined benefit pension. When you retire, these plans, also referred to as cash balance plans, provide you with a lifetime income. ‌The‌ ‌amount‌ ‌you‌ ‌get‌ ‌depends on your income and how long you’ve worked. ‌An example would be taking the average of your last five years of salary and adding 3% for each year of service to ‌80%. ‌You’d get $60,000 if you worked for 20 years, earning $100,000 on average in your last five years. Before you retire, make sure you understand your various payout options. Defined contribution pension. Typically, employers contribute a fixed percentage of your salary each year to this pension plan. You will generally see the value of your money grow‌ ‌over‌ ‌time. ‌However, leaving in the first 3-5 years might mean losing all ‌of‌ ‌it. ‌If you stay longer, you own more of it and you can take it home. There are some plans that invest your money for you. But most let you decide how you want to invest it. In both cases, participation‌ ‌is‌ ‌automatic. ‌If you have a retirement plan, understand its value, even if you don’t contribute. ‌These are important compensation benefits if you work in the military, for the government, or for a firm that has one. Whenever you change jobs, make sure you understand the vesting schedule of your pension or profit sharing plan. ‌After all, leaving too soon could mean forfeiting your pension. The Federal Thrift Savings Plan Thrift Savings Plans (TSP) are only available to federal employees and uniformed service members. ‌They function much like‌ ‌corporate‌ ‌401(k) plans. A TSP lets you put pre-tax money in, and if you withdraw it after retirement, it grows tax-deferred. ‌Some‌ ‌TSPs‌ even offer‌ ‌Roth‌ ‌401(k)s. There are usually five low-cost investment options available to participants. Among these are bond funds, S&P 500 index funds, small-cap funds, international stock funds, plus Treasury securities funds. Moreover, federal workers can invest in those core funds through several lifecycle funds with different retirement dates. ‌This‌ ‌should simplify the process of selecting investments. The‌ ‌main‌ ‌drawback‌ ‌of this plan is that your account balance is always uncertain at retirement. But, that’s the same with all defined contribution plans. There’s a $20,500 cap on TSP contributions in 2022. ‌If you’re 50 or older, you can contribute $6,500 more. Cash-Value Life Insurance Plan Companies sometimes offer insurance vehicles. Among the options available are ‌whole‌ ‌life,‌ ‌variable‌ ‌life,‌ ‌universal‌ ‌life‌ ‌, and‌ ‌variable universal‌ ‌life. ‌They build cash value while providing a death benefit and a retirement income. ‌ When you withdraw the cash value, your cost basis comes out first. However, if you don’t do it right and the policy lapses, you could get a big‌ ‌tax bill. People who have maxed out all other retirement-saving options should consider these products. ‌Once you’ve reached the maximum contributions for your 401(k) and IRA, you might consider ‌this‌ ‌retirement plan. Nonqualified Deferred Compensation Plans (NQDC) If you’re not a CEO or CFO, you’re not eligible to get an NQDC. ‌You can choose from two main types of NQDCs if you’re in the C-Suite. The first is a 401(k) plan with company matching and salary deferrals. The second is an employer-sponsored plan. Usually, the latter one doesn’t get funded. ‌A “mere promise to pay” can be used to claim money from a debtor. ‌It’s riskier since the company has to be financially stable. Additionally, it’s tax-deferred, so you’ll save money. ‌Until distributions are taxed, employers can’t deduct contributions. Frequently Asked Questions Among retirement plans, which are the best? IRAs are one of the best individual retirement plans. These include traditional IRAs, Roth IRAs, and spouse‌ ‌IRAs. ‌They are open to anyone with an income. The best employer retirement plans are 401(k), 403(b), or 457(b). What is the maximum contribution I can make to my‌ ‌401(k) and/or IRA? For 2022, the annual contribution limit is $20,500. However, if you’re 50 and over, you can contribute an additional $6,500 per year. As for IRAs, the annual contribution limit fo 2022 is $6,000. Or $7,000 if you’re age 50 or older. What‌ ‌are my options for the money in my 401(k) or pension plans? Generally, there are four broad options. Keep it invested in the company’s‌ ‌plan. Receive a lifetime income by annuitizing. Withdraw‌ ‌the‌ ‌account‌ ‌balance,‌ ‌pay‌ ‌taxes, and then invest it. Rollover to an IRA or other pension fund. If you do, you won’t have to pay taxes. And, you’ll continue to defer the income tax. What can I do to prepare for retirement while I’m still young? As early as possible, you should begin saving for your retirement. ‌By living within your means, you can save more money and ‌live‌ ‌on‌ ‌a‌ ‌lower amount‌ ‌in‌ ‌retirement. ‌Don’t forget to take advantage of the retirement ‌plans‌ ‌offered‌ ‌by‌ your employer to help supplement your retirement income. If not available, you can fund your retirement though an IRA or Solo 401(k). Taking advantage of all these options will allow you to save the money you need to live comfortably in retirement. How much money is a good amount ‌for‌ ‌retirement? A variety of factors determine retirement income. ‌Among them are your current lifestyle, retirement lifestyle,‌ ‌obligations,‌ ‌and‌ ‌health. ‌Experts say that you should have 80% of your salary in retirement. Article by John Rampton, Due About the Author John Rampton is an entrepreneur and connector. When he was 23 years old while attending the University of Utah he was hurt in a construction accident. His leg was snapped in half. He was told by 13 doctors he would never walk again. Over the next 12 months he had several surgeries, stem cell injections and learned how to walk again. During this time he studied and mastered how to make money work for you, not against you. He has since taught thousands through books, courses and written over 5000 articles online about finance, entrepreneurship and productivity. He has been recognized as the Top Online Influencers in the World by Entrepreneur Magazine and Finance Expert by Time . He is the Founder and CEO of Due. Updated on Jun 20, 2022, 2:40 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkJun 21st, 2022